Rand gains as Reserve Bank holds repo rate at 6.75%, as expected
Reserve Bank governor Lesetja Kganyago warns of continued political risk and the possibility that Moody’s could downgrade SA’s credit rating in February
The Reserve Bank kept interest rates unchanged on Thursday, when the monetary policy committee (MPC) wrapped up its first meeting of 2018. With a number of risk events on the horizon, the decision was expected by the majority of analysts, and leaves the repo rate at 6.75%, where it has been since the July 2017 cut of 25 basis points — the first cut in five years. Reserve Bank governor Lesetja Kganyago said that since the previous meeting of the MPC, the rand had appreciated by 13.1% against the dollar, by 9.6% against the euro, and by 10.6% to the pound on a trade-weighted basis. He did warn, however, that “in the near term, the rand is expected to remain sensitive to sentiment generated by political developments. The lingering prospect of a credit-ratings downgrade to sub-investment grade by Moody’s [also] continues to weigh on the longer-term outlook for the rand.” Within a few minutes of the decision being announced, the rand strengthened to R12.19 to the dollar, from R12.27 prio...
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