Rand softer on rates uncertainty

JOHANNESBURG – South Africa’s rand was softer against the US dollar yesterday amid nervousness before tomorrow’s central bank decision on interest rates.

The rand stood at 7,1620 versus the US dollar at 0640 GMT, about 0,6 per cent weaker than its New York close of 7,1160 on Monday. “The big driver will obviously be the interest rate decision in two days, but there seems to be a bit of uncertainty about what the central bank will do,” Jim Bryson, currency trader at Rand Merchant Bank said.The rand was seen trading between 7,12 and 7,18/US dollar before the bank’s rates announcement.”I think it will struggle to go lower (stronger) until the rate decision on Thursday,” Bryson said.Eleven out of 18 economists polled by Reuters said the MPC will leave the repo rate flat at nine per cent, while the rest saw a 50 basis points hike.February consumer inflation came in at a softer-than-expected 4,9 per cent but credit growth accelerated to 26,12 year-on-year during the same month.Inflation concerns are rising as international oil prices climbed to around US$70 a barrel and higher maize prices threaten food inflation.For this session, traders said the rand would be supported by a firmer gold price , which rose to US$676,20/6,50 an ounce from US$671,50/2,50 late in New York on Monday.South Africa is the largest exporter of the metal and the rand often tracks its fortunes.South African government bonds were also softer yesterday and analysts said interest rate uncertainties will prevent the bond market strengthening further.Nampa-Reuters”The big driver will obviously be the interest rate decision in two days, but there seems to be a bit of uncertainty about what the central bank will do,” Jim Bryson, currency trader at Rand Merchant Bank said.The rand was seen trading between 7,12 and 7,18/US dollar before the bank’s rates announcement.”I think it will struggle to go lower (stronger) until the rate decision on Thursday,” Bryson said.Eleven out of 18 economists polled by Reuters said the MPC will leave the repo rate flat at nine per cent, while the rest saw a 50 basis points hike.February consumer inflation came in at a softer-than-expected 4,9 per cent but credit growth accelerated to 26,12 year-on-year during the same month.Inflation concerns are rising as international oil prices climbed to around US$70 a barrel and higher maize prices threaten food inflation.For this session, traders said the rand would be supported by a firmer gold price , which rose to US$676,20/6,50 an ounce from US$671,50/2,50 late in New York on Monday.South Africa is the largest exporter of the metal and the rand often tracks its fortunes.South African government bonds were also softer yesterday and analysts said interest rate uncertainties will prevent the bond market strengthening further.Nampa-Reuters