eBusiness Weekly
The rand fared better on Thursday morning, a day after the US Federal Reserve kept interest rates on hold as expected, but gave little away in terms of guidance about future policy moves.
Hedging its bets, the Fed said in a statement that incoming data would guide its approach on interest rates, but acknowledged that inflation was moving closer to its 2% target band.
Markets had anticipated a somewhat hawkish stance from the Fed, in the light of higher inflation expectations.
“Everything considered, the statement was not as hawkish as we had expected it to be, but it was not dovish either. The probability of a June hike on the fed funds futures has jumped to 95% from 90% the day before,” Rand Merchant Bank analysts Isaah Mhlanga and Elena Ilkova said in an e-mailed noted to clients.
As the dollar recoiled following the Fed’s statement, the rand gained in line with other currencies.
The dollar has been the currency of choice lately amid early indications that other developed countries may not be in a position to raise interest rates in the immediate future, due to disappointing data.
The pound has come under considerable pressure since late April, when the Bank of England governor Mark Carney tempered expectations of monetary tightening in May.
At 9.49am, the rand was at R12.5788 to the dollar from R12.7051, R15.1008 to the euro from R15.1852 and at R17.1313 to the pound from R17.2473.
The euro was at $1.2005, from $1.1951. – BusinessLive
