Fin24

Rand stable ahead of ECB meeting

2012-08-02 12:59

Johannesburg - The rand was a bit stronger at noon on Thursday. The currency found itself in stable territory‚ tracking the euro‚ while eagerly awaiting the European Central Bank (ECB) and Bank of England’s rate announcements this afternoon.

“The Federal Reserve’s Ben Bernanke said nothing last night and I am sure he will do something before the US election in October this year. I am expecting some monetary stimulus in September‚ by the latest in October. The rand is stable now‚ waiting for the ECB’s president Mario Draghi - then there will be chaos‚” said Mark Kalkwarf‚ portfolio manager at Iquad Group.

At 11:49 local time the rand was bid at R8.30832 to the dollar‚ from R8.3305. It was bid at R10.1940 to the euro from R10.1912 and at R12.9037 against sterling from R12.9444.

The euro was bid at $1.2284 from $1.2236 on Wednesday.

Absa Capital said in a note earlier on Thursday that if the ECB failed to deliver a supportive message this afternoon‚ then we could expect the rand to weaken to last week’s lows over the coming days.

“Conversely‚ if the ECB surprises positively‚ then we would expect the rand to recover to this week’s opening levels ahead of tomorrow’s US employment report. We also argue that if today’s ECB meeting also fails to signal more monetary accommodation‚ then receiving interest for short-dated local interest rates is likely to be re-ignited‚ because a further deterioration in the European Union outlook situation could be the key catalyst for the SA Reserve Bank to cut rates another 50bp at the September monetary policy committee meeting‚” said the bank.