Rand gains after Sarb rates announcement | Fin24
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Rand gains after Sarb rates announcement

May 22 2015 09:56

Johannesburg - The rand strengthened against the dollar early on Friday, supported by a hawkish policy statement the previous day as the SA Reserve Bank (Sarb) signalled a rate hike in the coming months.

At 08:28 the rand was trading 0.43% stronger at R11.7920 to the dollar compared with its closing level on Thursday.

The rand touched a three-week high of R11.7350/dollar on Thursday after Sarb governor Lesetja Kganyago warned that inflation expectations remained uncomfortably close to the upper-end of the 3% to 6% target range over the longer term.

After the decision to hold rates, the rand retreated to close at R11.8425/dollar.

"The rand and long-end bonds may have found support from the very hawkish (policy) statement which accompanied the monetary policy committee’s decision to leave the repo rate unchanged yesterday," Carmen Nel of Rand Merchant Bank said in a note.

Kganyago said Sarb's Monetary Policy Committee voted 4:2 in favour of keeping the benchmark repo rate at 5.75%, but warned the deteriorating inflation outlook meant the stance could not be "maintained indefinitely".

The market on Friday was also waiting for the release of US inflation data later in the day.

In fixed income, the yield for the 2026 benchmark was down 0.5 basis points to 7.955%.

sarb  |  interest rates  |  markets  |  currencies  |  rand


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