Rand tumbles as Sarb buys forex
Johannesburg - The rand tumbled more than 1.5% against the dollar on Thursday, with dealers saying the Reserve Bank was in the market buying foreign exchange.
The unit hit a two-week high of R6.70/$ in the previous session, attracting dollar buying. It fell further as the dollar rallied after the US Federal Reserve gave no hint of further monetary support for the economy.
Global markets are in the red and the local bourse was not spared, with the JSE's Top 40 - (Tradeable) [JSE:J200] down 0.87%.
The rand was the worst perfomer of 17 emerging market currencies tracked by Reuters on the day.
"It's falling on the back of the same things as the rest of the world, although it is falling more because some stops were triggered," a local trader said.
It tumbled after piercing support at R6.85/$, which is also the 100-day moving average.
By midday, it was trading at R6.8555/$, from a close of R6.7750 in New York on Wednesday. It briefly hit R6.8816/$, its weakest in a week.
Bonds followed suit, with the yield on the 2015 bond up 4 basis points to 7.515% and that on the 2026 issue adding 9.5 basis points to 8.655%.
If this government was so sure about the future of this country, why do they buy foreign exchange? Isn't that an Imperialism or Western thing?
No magtig, they MUST rather invest in the sand rand before nationalising!
Now that is what I call confidence in your countrys' future! Buy foreign currency!!
SARB buys and sells foreign exchange all the time I understand. They do this to carry out their policies. They may buy foreign exchange to purposely weaken the rand to help make South African exports attractive. This can occur when big trading partners no longer buy our goods to to wilting demand brought about by recession (America). SARB are not driven by profit, I understand they are one of the custodians of our economy.