Rand notes. Picture: THINKSTOCK
Rand notes. Picture: THINKSTOCK

The rand was steady at marginally weaker levels on Thursday afternoon ahead of the announcement on interest rates by the Reserve Bank’s monetary policy committee (MPC), expected soon after 3pm.

Analysts expect the Bank to keep rates unchanged as it had previously warned that inflationary risks were on the upside. The improved inflation data earlier in the week was unlikely to sway the Bank’s stance on rates, analysts said.

The rand was likely to be volatile ahead of the credit-ratings determinations by rating agencies Moody’s and S&P on Friday evening.

The rand’s softer tone on Thursday was despite most emerging-market currencies, including the recently pressured Turkish lira, having firmed to the dollar.

The euro also regained some ground against the greenback, following the earlier release of dovish minutes from the US Federal Reserve.

"Although Fed officials expressed optimism over economic growth and expected interest rates to be raised in the ‘near term’, there was still growing concerns over the prolonged periods of stubbornly low inflation in the US," said FXTM analyst Lukman Otunuga.

The anxiety over low inflation questions the central bank’s ability to raise interest rates three times in 2018, clouding the prospects of higher rates beyond this year, he said. The market has priced in a 100% probability of a rate increase by the Fed next month.

Volumes were thin on the day, due to the Thanksgiving holiday in the US and Labour Day in Japan.

At 3pm, the rand was at R13.8852 to the dollar from R13.8253, at R16.4489 to the euro from R16.3419 and at R18.4796 to the pound from R18.4165.

The euro was at $1.1845 from $1.1822.

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