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Rand steadies as dealers await fresh local news

23 Jan, 2018 - 17:01 0 Views
Rand steadies as dealers await fresh local news

eBusiness Weekly

The rand held broadly steady on Tuesday morning, but stayed within touching distance of the symbolic R12/$ level, which represents the best level in two-and-a-half years. The local currency is highly sensitive to local political developments at the moment, and offshore events appear to be playing second fiddle.

The ANC has officially denied that its national executive committee has taken a decision to recall President Jacob Zuma. But party insiders insist a Zuma exit could be the cards, possibly before campaigning starts for next year’s general election. Investec economist Annabel Bishop said on Monday that Zuma’s exit could push the rand to strengthen to R11.70/$‚ a move that would help lower fuel prices and inflation.

A benign inflation outlook could encourage the Reserve Bank to resume its interest rate cutting cycle later in the year, though such policy steps would also take into account global monetary policies.

The US Federal Reserve is expected to raise interest rates again this year, and the European Central Bank to pull back on post-financial crisis stimulus measures. Markets have also responded positively to the reconstitution of the Eskom board, a move credited to new ANC leader Cyril Ramaphosa, who has vowed to stabilise struggling state-owned entities.

“Judging by the first few weeks of the year, it seems that the ruling party is ready to clean out their closet. At least, that is how it looks from the outside, but we have been here before. Actions not words are the order of the day,” TreasuryOne analysts said.

At 9.29am, the rand was at R12.1136 to the dollar from R12.0545, at R14.8352 to the euro from R14.7812 and at R16.9156 to the pound from R16.8595. The euro was at $1.2245 from $1.2261. – BusinessLive

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