Rand strengthens after Fed announcement

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IOL world currency1 Graphic: Renjith Krishnan.

The rand strengthened on Thursday morning after the Fed announced more stimulus measures.

“The rand is still going nowhere in relation to the US dollar‚ but the local unit is continuing to strengthen in relation to the Japanese yen‚ which is in keeping with our prevailing trade recommendation. As expected‚ the Fed announced another round of its bond-buying stimulus programme to replace Operation Twist‚” Absa Capital said in a note.

At 8.32am‚ the rand was bid at R8.6472 to the US dollar from Wednesday’s close of R8.6540. The local currency was bid at R11.3060 to the euro from its previous close of R11.3018 and at R13.9515 against sterling from R13.9545 before.

The euro was bid at $1.3082 from Wednesday’s close of $1.3065.

“Interestingly‚ the Fed also explicitly announced last night that it would continue with these stimulus measures until the US unemployment rate falls to 6.5% (currently 7.7%)‚” Absa Capital said.

“Risky assets have rallied in response to these explicit assurances and ... participants are expecting the Bank of Japan to also expand its stimulus programmes once this weekend’s elections are out of the way‚” it said. - I-Net Bridge

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