Rand unmoved by MPC decision

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IOL world currency1 Graphic: Renjith Krishnan.

The rand was unmoved by the Monetary Policy Committee (MPC) decision to keep the repo rate unchanged at 5.5% for the eighth consecutive meeting.

A survey of ten economists showed that none expected any change in the repo rate. The repo rate was last cut by 50 basis points in November 2010.

At 15:33 local time the rand was bid at R8.3211 to the dollar from 8.3045 at 15:00 when the South African Reserve Bank governor Gill Marcus started speaking. This compared with Wednesday?s close of 8.3737. It was bid at R10.4780 to the euro from R10.5423 and at R13.0638 against sterling from R13.1944 at the previous close.

The euro was bid at US$1.2594 from $1.2608 at 15:00 and $1.2594 at Wednesday?s close.

“The rand briefly went to R8.30 when the governor started speaking? but as the euro sank below $1.26? so the rand followed? indicating that the MPC had no effect on the rand,” a local trader said.

Dow Jones Newswires reported that German Finance Minister Wolfgang Schaeuble said on Thursday that it would be better if Berlin and Paris displayed more public harmony as both countries were committed to finding common ground.

“We mustn't give the impression of fundamental disagreements,” Schaeuble said, adding that he agreed with his French counterpart Pierre Moscovici on this as financial markets remained nervous.

Close ties between Paris and Berlin have traditionally been crucial for Europe and the present disagreement between France's new President Francois Hollande and German Chancellor Angela Merkel over the need for more growth incentives and less austerity have added to uncertainty about the future of the eurozone.

Due to problems in some of the member states in the eurozone, there is currently a “confidence crisis in the euro as a whole”, Schaeuble told reporters after a meeting with his colleagues from Germany's 16 states.

“But the countries affected must take action to solve their problems as there was no alternative,” he added.

The ongoing debt crisis and the problems in Greece and Spain in particular have unsettled markets in recent days, pushing the euro lower. - I-Net Bridge


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