Rand firms after Reserve Bank keeps rates unchanged
The rand was firmer on Thursday afternoon, after the Reserve Bank kept interest rates unchanged at its first meeting of 2018. Despite the rand appreciating 13.1% against the dollar since the last meeting of the monetary policy committee (MPC) in November, Reserve Bank governor Lesetja Kganyago warned of possible renewed rand weakness. "In the near term, the rand is expected to remain sensitive to sentiment generated by political developments," he said. These included the lingering prospect of a credit-ratings downgrade to subinvestment grade by Moody’s. A Bloomberg consensus of 19 economists and analysts showed that 13 expected rates to be unchanged, while five forecast a cut of 25 basis points, with one predicting a 50 basis-points drop. The rand showed little movement during most of Kganyago’s address, having been at R12.2713 to the dollar when he began. It strengthened, however, towards the end, to R12.1910, before falling back to R12.2365 by the time he stopped speaking.