The rand continued to be range bound in early trade on Thursday‚ ahead of the rate cut announcement by the Reserve Bank’s monetary policy committee (MPC) as well as the expected German parliamentary vote on the Spanish bail-out.
The local currency has been under pressure from depressed global sentiment‚ particularly after US Federal Reserve chairman Ben Bernanke indicated earlier this week that the world’s largest economy was in a fair amount of distress.
At 08:45 the rand was bid at R8.1537 to the dollar from its previous close of R8.1547. It was bid at R10.0163 to the euro from its previous close of R10.0085 and at R12.7596 against sterling from R12.7521 before.
The euro was bid at US$1.2283 from its previous close of $1.2281.
RMB said in its morning report that it was time for the rand to rally. “EUR/USD seems to have finally stabilised‚ US equities are pushing multimonth highs‚ funding stress is easing‚ the surge of foreign bond buying continues‚ and our compatriot currencies are flying‚” RMB said.
The bank said the major international event of the day was the Bundestag’s vote on the Spanish bank bail-out. The deal is expected to pass easily but there is the potential for a revolt by some backbenchers‚ causing embarrassment to Chancellor Angela Merkel.
On the local front‚ all eyes will be on the MPC press conference‚ but with a rate cut later this year already priced in‚ RMB said it was hard to see how anything said today could affect the rand negatively.
Bridget Taylor of Nedbank Dealers said: “We are pretty much range bound and we’re expecting to reach a high of 8.12; in the midterm there is no evidence of change. We are not expecting much from the MPC‚ I think they will give a flat rate decision.”
Dow Jones Newswires reported the dollar fell to a six-week low versus the yen in Asia on Thursday‚ on the back of broad gains in the region’s stock markets following the semiannual congressional appearance by Bernanke.
Bernanke told legislators on Wednesday it was “certainly possible” that the Fed could take new steps to support the economic recovery if the jobs market did not show gains.
Asian stocks gained broadly on Thursday‚ with the Nikkei up 0.9%‚ in part helped by solid corporate earnings in the US. - I-Net Bridge