Depressed global sentiment continued to weigh down on the rand in midday trade.
The gloomy outlook for the US economy painted by US Federal Reserve chairman Ben Bernanke on Tuesday hit emerging markets‚ with expectations of a further stimulus injection for the US economy remaining high.
The decrease in SA’s consumer price index (CPI)‚ which the Reserve Bank uses to target inflation‚ had little impact on the markets. The CPI was 5.5% year on year in June from 5.7% in May‚ Statistics SA said on Wednesday.
At 11:41 the rand was bid at R8.1918 to the dollar from its previous close of R8.1646 . It was bid at R10.0260 to the euro from its previous close of R10.0321 and at R12.7657 against sterling from R12.7751 before.
The euro was bid at US$1.2241 from its previous close of $1.2286.
Bruce Donald‚ head of rand strategy at Standard Bank‚ said: “The much anticipated testimony to the Senate Banking Committee yesterday by US Fed chairman Bernanke was at first disappointing to markets‚ as no firm signal was given on the quantitative easing. This initially boosted the dollar and led to some paring of risk. However‚ in the Q&A session that followed‚ he then said that policy makers were looking at options for further easing‚ which offered the market some cheer. The dollar ended the day marginally weaker. He (Bernanke) will testify to the House Financial Services Committee today.”
In other news dragging global sentiment lower‚ Dow Jones Newswires reported that UK businesses stepped back from expansion plans in July amid concern about weakening demand for goods and services‚ the Bank of England's network of regional agents reported.
In their monthly assessment of business conditions in the UK‚ published on Wednesday‚ the agents said firms' investment intentions remained positive‚ but had softened compared with the previous month.
The pullback in investment plans was particularly marked among firms supplying the domestic economy‚ the agents said‚ potentially signalling further problems ahead for Britain's recession-hit economy. - I-Net Bridge