Rand firms as ECB decision weakens euro in volatile trade
The European Central Bank says it will end its asset-purchasing programme at the end of December, driving bond yields lower
The rand was sharply firmer on Thursday afternoon after the European Central Bank (ECB) kept rates unchanged, as expected, and also announced it would end its stimulus programme by year-end.However, the euro traded in the opposite direction, weakening sharply against the dollar in what analysts described as a reaction to the ECB’s cautious stance on when interest-rate increases will take place.The prospects of higher interest rates tend to support the dollar.The ECB said it would end its asset-purchasing programme, in place since the financial crisis of 2009, at the end of December. This will entail the tapering, or lessening, of its monthly purchases from €30bn in September to €15bn from October to the end of the year. This saw the euro spike to $1.1851.However, the euro weakened soon thereafter, after the ECB said it expected rates to remain unchanged "at least throughout the summer of 2019". This relatively dovish and cautious reaction unsettled the market, which expected a more ...
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