Rand reverses gains
The rand carried negative momentum into the new week as financial markets turned the attention to Wednesday’s FOMC decision, according to NKC Research.
Trading volumes were also thinner as both Chinese and Australian markets were closed for holidays, which limited activity; even those market participants who were working in Asia were largely on hold before Wednesday afternoon’s FOMC decision.
While the FOMC is expected to maintain a very dovish policy stance, we look for the committee to signal it will be “vigilant and closely monitor” inflation and inflation expectations. The gradual shift to a less extremely accommodative policy stance represents the initial pivot towards an announcement of QE tapering, starting in early 2022, followed by two 25- bps rate hikes in 2023.
At the close of local trade, the rand quoted 0.32 percent softer, at R13.73/$, after trading in range of R13.69/$ to R13.80/$. The rand traded mostly sideways overnight. The expected range of the rand against the dollar today is R13.60/$ to R13.90/$.