Rand dips below R13/$ on Yellen comments

Cape Town -  The rand has firmed more than 1% as the dollar was placed on the back foot by comments made by Federal Reserve Chair Janet Yellen.

Yellen, speaking in Jackson Hole, Wyoming, on Friday said the financial system is safer now than it was then though some adjustments to regulations may be needed.

There was no mention about monetary policy guidance going forward, said TreasuryOne in a snap note to clients.

"The USD is on the back foot after this, with EURUSD trading up at 1.1850 and USDZAR testing R13.12, and EURZAR unmoved at R15.55," said TreasuryOne.

The rand subsequently strengthened to R13.02/$ and by 17:58 the local unit was trading up 1.33% at R13.03 from its previous close in New York.

The rand strengthened to R12.99/$ by 18:18 and moved to R13.01 shortly after. 

Bloomberg reports US stocks held gains and the dollar fell with Treasury yields as her remarks lacked fresh guidance on interest-rate policy.

According to Bloomberg Yellen issued her broadest defence so far of the government’s response to the 2008 financial-market meltdown while outlining some areas that regulators could review to improve efficiency in the financial system.

“Any adjustments to the regulatory framework should be modest and preserve the increase in resilience at large dealers and banks associated with the reforms put in place in recent years,” Yellen said, in what could be her final speech as Fed chair at the annual gathering of central bankers. Her term expires in February.

President Donald Trump could offer to nominate her for a second term, but economists polled by Bloomberg expect him to chose someone else.

In a 19-page speech that was almost entirely focused on financial regulations, Yellen did make a brief reference to the outlook, noting that “substantial progress has been made toward the Federal Reserve’s economic objectives of maximum employment and price stability.”

• READ: Yellen: Any changes to financial rules should be modest

Read Fin24's top stories trending on Twitter: Fin24’s top stories