Publications
Partners
Johannesburg – The rand was stronger on Thursday afternoon on the back of a stronger euro and after the Draghi speech‚ which gave details of new economic stimulus measures in the eurozone.
European Central Bank (ECB) President Mario Draghi announced a new sovereign bond-buying programme and said it would provide “a fully effective backstop” against market volatility.
“The euro has been very volatile since the Draghi speech and the rand was much the same‚” a local trader said.
“Last week the euro did very well‚ and now we have seen a bit of unwinding and euro/rand profit taking on the crosses‚” he said.
At 16:00‚ the rand was bid at R8.3282 to the dollar from R8.3919 at Wednesday’s close. It was bid at R10.4817 to the euro from its previous close of R10.5722 and at R13.2527 against sterling from R13.3465 before.
The euro was bid at $1.2578 from $1.2595 at Wednesday’s close.
The ECB on Thursday unveiled a range of new measures to support the eurozone economy as it slashed its growth forecasts for this year and next‚ and made fresh changes aimed at ensuring banks have sufficient collateral to pledge in return for ECB loans‚ Dow Jones Newswires reported.
“We need to be in a position to safeguard the monetary policy transmission mechanism in all countries of the euro area‚” Draghi said‚ repeating that the ECB would stay “firmly within our mandate” of keeping stable prices.
By purchasing government bonds‚ the ECB hopes to raise the price of these bonds and thus lower the yield‚ which moves inversely to the price. The yield serves as a benchmark for the cost of a country to borrow on the open market.
The ECB had earlier left its official interest rates unchanged.
European Central Bank (ECB) President Mario Draghi announced a new sovereign bond-buying programme and said it would provide “a fully effective backstop” against market volatility.
“The euro has been very volatile since the Draghi speech and the rand was much the same‚” a local trader said.
“Last week the euro did very well‚ and now we have seen a bit of unwinding and euro/rand profit taking on the crosses‚” he said.
At 16:00‚ the rand was bid at R8.3282 to the dollar from R8.3919 at Wednesday’s close. It was bid at R10.4817 to the euro from its previous close of R10.5722 and at R13.2527 against sterling from R13.3465 before.
The euro was bid at $1.2578 from $1.2595 at Wednesday’s close.
The ECB on Thursday unveiled a range of new measures to support the eurozone economy as it slashed its growth forecasts for this year and next‚ and made fresh changes aimed at ensuring banks have sufficient collateral to pledge in return for ECB loans‚ Dow Jones Newswires reported.
“We need to be in a position to safeguard the monetary policy transmission mechanism in all countries of the euro area‚” Draghi said‚ repeating that the ECB would stay “firmly within our mandate” of keeping stable prices.
By purchasing government bonds‚ the ECB hopes to raise the price of these bonds and thus lower the yield‚ which moves inversely to the price. The yield serves as a benchmark for the cost of a country to borrow on the open market.
The ECB had earlier left its official interest rates unchanged.
