Johannesburg - Emerging currencies took a beating on Thursday in tandem with most other higher-risk asset classes after Federal Reserve chairperson Ben Bernanke laid out a timetable for the end of the US bond buying programme, reports Reuters.
The rand and the Russian rouble were down more than 2% to the dollar, while earlier in Asia central banks in India and South Korea intervened to stem currency losses.
The rand, which were down 2.47% at R10.25 by 15:00, earlier traded at R10.2871/$ from an overnight close of R10.1864 and Tuesday’s close of R9.9999.
The local unit tracked a sell-off in gold as investors fled the safe haven commodity on an improved inflation outlook for the US.
“Gold is used as a hedge when people believe inflation will increase but with the US flashing its inflation forecast‚ people are expecting global inflation to subside causing a sell-off in gold‚” Henry Flint of Thebe Stockbroking told I-Net Bridge.
The Fed said it expected inflation to decline to between 0.8% and 1.2% this year from its previous forecast of 1.3% to 1.7% at its Federal Reserve Open Committee (FOMC) meeting in March.
“The Fed thought the economic support that they were providing to the economy would fuel inflation but that has not materialised causing the downward revision‚” said Flint.
The local currency was bid at R13.5858/€ from its previous close of R13.5357 and was at R15.9042/£ from R15.7690 at its previous close.
The euro was bid at $1.3206 from $1.3287 at Wednesday’s close and $1.3385 at Tuesday’s close.
At the same time the spot gold price had lost 3.01% at $1 302.98/oz.
- Reuters/I-Net Bridge
The rand and the Russian rouble were down more than 2% to the dollar, while earlier in Asia central banks in India and South Korea intervened to stem currency losses.
The rand, which were down 2.47% at R10.25 by 15:00, earlier traded at R10.2871/$ from an overnight close of R10.1864 and Tuesday’s close of R9.9999.
The local unit tracked a sell-off in gold as investors fled the safe haven commodity on an improved inflation outlook for the US.
“Gold is used as a hedge when people believe inflation will increase but with the US flashing its inflation forecast‚ people are expecting global inflation to subside causing a sell-off in gold‚” Henry Flint of Thebe Stockbroking told I-Net Bridge.
The Fed said it expected inflation to decline to between 0.8% and 1.2% this year from its previous forecast of 1.3% to 1.7% at its Federal Reserve Open Committee (FOMC) meeting in March.
“The Fed thought the economic support that they were providing to the economy would fuel inflation but that has not materialised causing the downward revision‚” said Flint.
The local currency was bid at R13.5858/€ from its previous close of R13.5357 and was at R15.9042/£ from R15.7690 at its previous close.
The euro was bid at $1.3206 from $1.3287 at Wednesday’s close and $1.3385 at Tuesday’s close.
At the same time the spot gold price had lost 3.01% at $1 302.98/oz.
- Reuters/I-Net Bridge