Rand cracks through R13.80 barrier ahead of US Fed meeting

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Rand cracks through R13.80 barrier ahead of US Fed meeting

11:39 CAT | 21 Sep 2016

The rand cracked through the R13.80/$ barrier for the first time in two weeks on Wednesday morning just hours before the US Federal Reserve announcement on interest rates.

Markets expect the US Fed to leave rates on hold and hope for guidance from chairwoman Janet Yellen on US monetary policy direction.

Rand Merchant Bank currency strategist John Cairns said: “Expect further volatility around the Fed press conference tonight. The probability of a rate hike is only 12%, but the market will watch for changes in the interest rate forecasts and tone of the statement.”

Higher US rates make the dollar attractive as they boost returns on assets denominated in the currency.

Sentiment has been fragile and volatile recently with rand slipping to highs 14.59/$ as recently as last week but rebounding to current levels of R13.78/$.

At 9.01am, the rand was at R13.7890 to the dollar from Tuesday’s R13.9152. It was at R15.3635 to the euro from R15.5178 and at R17.8845 to the pound from R18.0728.

The euro was at $1.1141 from $1.1150 previously.

Source: Business Day Live