Rand firms slightly ahead of repo rate decision
The rand was slightly stronger on Thursday morning as investors shifted their attention to the Reserve Bank’s repo rate decision later in the day.
The market has largely priced in that the Bank will keep the rate unchanged at 6.5%. This is despite a weaker-than-expected inflation print on Wednesday supporting the argument that the Bank may cut.
A rate cut could possibly weaken the local currency, as it would make SA’s bonds relatively less attractive to investors in search for higher yielding assets.
RMB analyst Nema Ramkhelawan-Bhana said short-term bonds could increase between five to 10 basis points on the rate decision, before plateauing, “if our base case, which is largely held by the majority of analysts, plays out and is accompanied by a hawkish statement”.
At 10.10am, the rand had firmed 0.1% to R14.768/$ after closing at R14.7834 on Wednesday. It was flat at R16.3629/€ and R19.1033/£, while the euro was little changed at $1.108.
The R186 government bond was stronger, with the yield falling 1.5 basis points to 8.32%. Bond yields move inversely to bond prices.
Gold was up 0.1% to $1,472.8/oz, while platinum lost 0.41% to $914.26. Brent crude lost 0.32% to $62.26 a barrel.