Johannesburg – The rand staged a mild recovery in early trade on Thursday after a steep fall across the board on Wednesday‚ which analysts attributed to the lingering poor domestic sentiment.
At 9.52am‚ the rand was bid at R9.0292 to the US dollar from R9.0626 at Wednesday’s close.
The local currency was bid at R12.0386 to the euro from its previous close of R12.0580 and at R14.2988 against sterling from R14.3371 before.
The euro was bid at $1.3340 from Wednesday’s close of $1.3307.
Absa Capital analysts said in a note that given the extent to which the local currency had fallen on Wednesday‚ the rand bears may take a breather this morning.
“Further short covering‚ possibly back down to the 8.90/US dollar area‚ would also be expected if the South African Reserve Bank’s Monetary Policy Committee (MPC) statement proves to be more hawkish than has seen in past quarters and/or the central bank expresses notable concern about the extent of the rand’s recent depreciation. However‚ if this policy statement remains relatively dovish and/or the SARB displays increased concerns for SA’s current account‚ then the rand is likely to incur a fresh wave of selling pressure‚ possibly to 9.20/US dollar over the coming days‚” Absa Capital analysts said.
The SARB’s MPC will announce its interest rate decision at around 3.15pm this afternoon following its three-day meeting.
The repo rate is expected to remain unchanged at 5.0% according to a survey of eleven leading economists by I-Net Bridge. - I-Net Bridge