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“The dollar has weakened against a basket of currencies in today’s trading after the minutes of the US Federal Reserve meeting seem to suggest it is willing to deliver more stimulus. The net effect for the rand was it retracing to 8.2200 from yesterday’s lows of 8.3300‚” said Lynden Reabow‚ head of PSG's currency desk.
At 11:31 local time the rand was trading at R8.2556 to the dollar Wednesday’s close of R8.2261. It was trading at R10.3657 to the euro from its previous close of R10.3048 and at R13.1150 against sterling from R13.0524 before.
The euro was bid at $1.2554 from $1.2533.
“Some market players are cautious of the chances of more quantitative easing from the Fed as they feel that the mixed bag of data seen lately seems to suggest that the world’s largest economy is slowly gathering traction‚ which could keep QE3 at bay for now‚” Reabow said.
“The rand is also being supported by foreign inflows‚ as investors looking for higher yielding bonds turn to the emerging market space and are finding some joy in the South African bond market‚” he said.
“Coming in this morning we are seeing a very strong euro at over 1.2500 to the US dollar boosted by expectations that the ECB will also throw further stimulus at Europe’s debt woes and help lower Spanish and Italian bond yields The current climate could start to bring the ZAR bulls out again as we look for a retracement back to 8.0800‚” Reabow added.
