Graphic: renjith krishnan

Johannesburg – The rand weakened slightly following the MPC announcement on Thursday afternoon. The bank left the repo rate unchanged at 5.0%.

“We might see some initial weakening but we will probably see it rebound slightly‚” said Tony van Dyk‚ a currency dealer at the Iquad Group.

At 3pm‚ prior to the announcement‚ the rand was trading at R9.0249 to the US dollar‚ R12.0290 to the euro‚ and R14.2622 to the pound.

In her speech SARB governor Gill Marcus said the global growth outlook remained challenging. She also highlighted concerns that a wage price spiral could exacerbate unemployment and drive inflation.

“She didn’t say anything unexpected. The bank is stuck between a rock and a hard place because inflationary pressures mean they can’t lower rates to stimulate growth when‚ if anything‚ they should be raising the rate.”

At 3.40pm‚ the rand was bid at R9.0731 to the US dollar from R9.0626 at Wednesday’s close. The local currency was bid at R12.0990 to the euro from its previous close of R12.0580 and at R14.3038 against sterling from R14.3371 before.

“In the short term we will remain under some pressure‚ but hopefully the weaker range will ease the trade deficit‚” he said. - I-Net Bridge