Tuesday, 22 November 2011

SA Rand Rebounds on Outlook for Interest Rates

The South African rand rebounded these days after yesterday’s decline on the speculation the central bank will keep its interest rates unchanged, continuing to draw foreign investors.

South Africa’s interest rates are important for the rand as the differential between the South African rates and also the borrowing prices within the developed markets attract investors interested in carry trades. the most interest rate of South Africa is at 5.5 percent, compared to zero.25 p.c within the USA, 1.25 p.c within the European Union and zero.1 p.c in Japan. The South African Reserve Bank left the benchmark repo rate unchanged on November 10 for the sixth consecutive month. Analysts consider chance on an interest rate cut as low.

Economists expect that the govt report will show tomorrow that the buyer value inflation rose to 5.9 p.c in October from 5.7 p.c in September. The weakening rand contributed to the price growth. As long as the upward pressure on inflation remains, the central bank isn’t likely to reduce its lending rates and South Africa will continue to be engaging to hold traders.

USD/ZAR fell from 8.3150 to 8.2430 today before trading at 8.3030 as of 11:24 GMT. Yesterday, the currency pair rose from 8.1740 to 8.3140.

1 comment:

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