adminJOHANNESBURG – South Africa’s rand firmed against the dollar for the second straight day on Friday as renewed stimulus measures in the euro zone and China boosted the attractiveness of high-yielding yet riskier emerging market assets.By 1447 GMT the rand climbed 0.33 percent to 10.9200 per dollar, adding to gains achieved in the previous session after the central bank’s decision to leave rates unchanged pushed the currency past the 11.000 mark to near a three-week high.
Yields on government bonds also firmed, with the benchmark issue due in 2026 dropping 4 basis points to 7.725 percent. Earlier, ECB chief Mario Draghi threw the door wide open for full-scale money printing on the same day China, the world’s second’s biggest economy, unexpectedly cut interest rates in a bid to boost slowing economic activity.
The moves, which signal a worsening growth outlook in two of the largest economic regions globally, saw the rand rally, more so following Thursday’s MPC where newly-appointed governor Lesetja Kganyago signalled a downward trend in local consumer prices.
“The change in the tone of the speech came in the reference to the downside risks on inflation,” said Sean McCalgan, an economist at ETM Analytics. “We think rates could remain flat for a while to come.”
Inflation dipped below the bank’s upper target of 6 percent earlier in the month, and the bank predicts it will average 5.3 percent in 2015. – Reuters
Bongani Ndlovu
Online Reporter