The rand continued to consolidate in midday trade on Tuesday as appetite for risk assets has risen on improved global sentiment ahead of a European Central Bank (ECB) meeting later in the week.
The ECB is expected to announce am interest rate cut on Thursday‚ analysts predicted.
“Markets have increased their risk appetite on improved global sentiment‚ which is good and driving the emerging markets. There is a lot of optimism globally concerning the eurozone‚” Bridget Taylor of Nedbank said.
At 11:47‚ the rand was bid at R8.1112 to the dollar from its previous close of R8.1505. It was bid at R10.2092 to the euro from its previous close of R10.2549 and at R12.7119 against sterling from R12.7865 before.
The euro was bid at US$1.2593 from its previous close of $1.2584.
Standard Bank commenting on the market’s resilience said: “The prospect of further monetary easing this week from the ECB and BoE has whetted investors’ appetite for risk assets. Not even the slew of weak PMI prints that emerged across leading economies yesterday could dent the market’s new-found optimism.”
The bank added that emerging market stocks rose on the back of this improved sentiment‚ pushing the MSCI EM index to a near seven-week high‚ while emerging market currencies enjoyed similar favour.
The European Union must move forward with its economic integration process and look at political integration as well‚ the President of the European Commission Jose Manuel Barroso said on Tuesday‚ according to Dow Jones Newswires.
“I believe the banking union is an indispensable step‚ but a genuine [economic and monetary union] must go further: we need to build a fiscal union‚ a reinforced economic union and take steps towards a political union‚” Barroso told the European Parliament. - I-Net Bridge