Rand volatility expected to return
ALL EYES are on the two major central bank meetings, Federal Open Market Committee and European Central Bank (ECB), tonight and tomorrow, while the rand continues to take a beating, trading within a R13.13-to-R13.25 range from Monday’s 5pm bid of R13.12 a dollar.
Senior currency dealer at TreasuryOne, Andre Botha, said the rand was headed into the belly of the beast this week with the market looking at the two central banks meetings to give some direction.
“On the one side, we have the Fed that everybody expects to hike by 25 basis points, but a lot of attention would be paid to the statement after the interest rate decision. Should the Fed turn more dovish, it could help EMs (emerging markets) further but the direction of the Fed could go anyway.
“On the other side is the ECB, where (president) Mario Draghi sits with a dilemma on whether to announce the start of tapering in their QE programme or push the start of tapering out further. We can expect some volatility after the ECB meeting,” said Botha.
At 5pm yesterday, the rand was bid 9c weaker at R13.21 to the greenback. Against the pound, the rand was 7c softer at R17.63 and to the euro, the currency eased 8c to R15.57.
Meanwhile, JSE stocks closed higher, with the blue chip Top40 index increasing 0.14 percent to 51 909.40 points, while the broader all share index ticked up 0.11 percent to 58 207.82 points.
The biggest gainers were Mediclinic, which rose 3.7 percent to R98.41, followed by Old Mutual, up 2.97 percent to R39.49.
Bidcorp advanced 2.84 percent to R272, while KAP Industrial gained 2.61 percent to R7.85 and Aspen Pharmacare was up 2.32 percent to close at R265.
Leading losses were Sibanye, which dropped 3.8 percent to R8.85, followed by Kumba Iron Ore, which declined 3.38 percent to R309.17. PSG Konsult decreased 3.18 percent to R9.45, while Anglo American lost 2.07 percent to R321.59 and Dis-Chem Pharmacies gave up 2.25 percent to R27.76.
Meanwhile, Reuters reports that world stock markets were little changed yesterday while the dollar fell slightly against an index of major currencies, as investors brushed aside the US-North Korea summit aimed at denuclearising the Korean peninsula.