The rand was slightly firmer on Thursday morning but was on track for its third weekly loss, as investors await the SA Reserve Bank’s repo rate decision later in the day.
Rand Merchant Bank analyst Nema Ramkhelawan-Bhana said the rand could strengthen by up to 1% in intraday trade and the yield on short-term bonds could move higher by up to 10 basis points on Thursday, if the Reserve Bank keeps the repo rate unchanged at 6.5%, in line with market expectations.
“The reality is though, that a mere 1% move on the back of the rates announcement isn’t enough to dislodge R/$ from the safety of its 14.30-14.50 trading range that has been evident over the last week,” Ramkhelawan-Bhana said.
With the February budget and a ratings review by Moody’s Investors Service still to come, analysts say the Reserve Bank may avoid cutting interest rates.
While lower interest rates could stimulate economic activity, they would make SA bonds less attractive to investors on the hunt for higher yielding returns.
At 10.46am, the rand had strengthened 0.1% to R14.3747/$ after ending the previous session at R14.3889. It was little changed at R16.0405/€ and R18.7701/£. The euro was flat at $1.1159.
The R2030 government bond was weaker with the yield rising one basis point to 9.065. Bond yields move inversely to bond prices.
Gold was down 0.18% to $1,553.39/oz and platinum 0.53% to $1,021.86. Brent crude added 0.31% to $64.5