Rand nears multi-week high following choppy trading session
JOHANNESBURG: The rand hovered near a five-week high against the greenback as markets awaited the release of the Fed minutes, according to NKC Research.
The baseline scenario is for US inflation to accelerate in coming months as base effects, one-off price increases associated with the reopening of the economy, and pass through effects of supply chain bottlenecks steer core price growth to around 2.5 percent y-o-y.
Nevertheless, with a retreat to around 2.0 percent seen by 2022, and policymakers’ caution regarding the persistent undershooting of the inflation target (which was the key driver behind the adoption of the new flexible average inflation target framework), a US rate lift-off is expected by 2023.
Key risks include a faster start to the tightening cycle, which risks a correction in global markets next year, including a widening of bond spreads in adjustment to a tightening in global financial conditions. The baseline scenario envisions the federal funds rate to be raised only by mid-2023.
At the close of trade, the rand quoted 0.02 percent weaker, at R14.51/$, after trading in range of between R14.49/$ and R14.58/$. The rand depreciated further in after-hours trading yesterday but recovered during this morning’s Asian trading session. The expected range of the rand against the dollar today is between R14.45/$ and R14.65/$.
Brent crude oil
The Brent oil price whipsawed yesterday after the Energy Information Administration said US crude stockpiles fell more than expected in the week to April 2. Specifically, crude inventories dropped by 3.5 million barrels last week to reach 501.8 million barrels, compared with analysts' expectations of a 1.4 million-barrel decline.
At the close of local trade, benchmark Brent crude futures quoted 0.64 percent lower, at $62.44pb. Crude prices traded flat during Asian trade this morning.
BUSINESS REPORT ONLINE