Investors do not expect the US Federal Reserve to change rates on Wednesday after recent disappointing US economic data. The South African Reserve Bank was also not expected to change the repo rate‚ now at 7%‚ on Thursday after the rand strengthened‚ and following a broad dismissal of inflationary pressures.
The Bank of Japan was also expected to announce a rates decision on Wednesday. The European Central Bank will make its announcement on Thursday. At 3.26pm‚ the rand was R13.8613 to the dollar from Monday's R14.0133.
It touched an intraday high of R13.8471/$. It was at R15.500 to the euro from R15.6575‚ and at R17.9671 to the pound from R18.2571 on Monday. The euro was at $1.1182 from $1.1174 previously. Nedbank analysts have forecast inflation at an average 6.2% in 2016 before dropping to 5.7% in 2017.
The Reserve Bank has forecast 6.6% and 6%‚ respectively. Meanwhile‚ forward-rate agreements were pricing in a 13% probability of a 25-basis-points interest-rate increase at this week’s meeting‚ and a 33% probability of a 25-basis-points increase in three months' time‚ the analysts said. The chance of an increase this year will be higher should the rand weaken and credit-ratings agencies tilt towards a sovereign downgrade‚ they said.
- TMG Digital/BDlive
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