The rand strengthened from R13.06/$ on Wednesday evening to R12.87/$ at 6.45am on Thursday morning as the dollar skidded against most currencies after the US Federal Reserve removed the qualifier "recently" with reference to inflation falling under its target range. In its statement explaining why it left its funds rate unchanged at 1.25% as expected on Wednesday night, the Fed indicated it did not consider inflation falling to 1.6%— which is under its 1.7%-2% target range — as a short-term problem. This means US interest rates are unlikely to rise further in 2017. The rand was also boosted by Brazil’s central bank cutting its rate by one percentage point to 9.25% as expected. This is the Brazilian central bank’s third consecutive one percentage point cut, and the rapid pace at which Brazil’s interest rates have been cut is frowned on by institutions investing in emerging-market bonds, making them eye South African government bonds more favourably despite this country’s economic pro...
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