Rand softens as markets prepare for Sarb meeting
JOHANNESBURG - The South African rand ebbed as traders closed out long positions ahead of the Sarb rates decision and global risk-on sentiment lost some momentum.
Traders booked profits after a strong rally in the rand, signalling caution ahead of the Sarb decision due November 19. The consensus is for a hold in the repo rate at a record low of 3.5 percent, with 17 out of 22 economists surveyed by Reuters predicted no-change in the policy stance.
Along with four other analysts surveyed, we pencilled in a 25-bps rate cut at this week’s meeting. A policy-led softening in the greenback supports a stronger outlook for the rand, tempering imported inflation (notably fuel), which the monetary policy committee will take in consideration in assessment of the inflation outlook. Furthermore, the brittle growth environment and fragile demand-side warrant another jolt of monetary stimulus.
At the close of local trade, the rand quoted 0.46 percent weaker at R15.39 /$, after trading in range of R15.31/$ - R15.44/$. The rand remained on the back foot overnight. Expected range today R15.20/$ - R15.65/$.
South African bourse
The JSE All Share (-0.37 percent) ended lower yesterday dragged by loses in large technology (-1.93 percent) and resources (-1.36 percent) stocks. In the overall emerging market sphere, the MSCI Emerging Market Index (+0.22 percent) traded higher.
Brent crude oil
The Brent oil price paused yesterday following its strong rally the session before. Energy markets have been hampered by stricter containment measures across the globe. Traders are awaiting the Opec+ meeting that is scheduled for end of this month to see if more production cuts will be implemented. At the close of local trade, benchmark Brent crude futures lower at $43.56pb. Crude prices traded slightly firmer during Asian trade this morning.
BUSINESS REPORT ONLINE