Rand recovers from knee-jerk reaction to rate announcement
The rand recovered back under R13.70/$ on Friday morning from Thurday’s R13.83/$ after Reserve Bank governor Lesetja Kganyago indicated interest rates will be level for some time.
The rand was trading at R13.75/$, R15.67/€ and R17.82/£ at 9.55am.
“All things considered, the rand is performing reasonably well if one considers the significant change in inflation expectations and the Reserve Bank’s quarterly projection model in just six weeks,” Mercato analyst Nico du Plessis said in an e-mailed report.
Nedbank’s economic team called November’s interest rate increase “unfortunate”, saying all the reasons given on Thursday for not increasing interest rates were already evident three months ago.
The Reserve Bank’s monetary policy committee uses a poll of economists done by Stellenbosch University’s Bureau for Economic Research (BER) to predict the future trajectory of inflation.
The BER only makes this report public after the Reserve Bank governor has announced the committee’s interest rate decision.
The forecast for average inflation in 2019 was lowered to 4.8% from 5.5%, and for 2020 to 5.3% from 5.4%.