The rand weakened against the dollar on Thursday after the Reserve Bank kept the repo unchanged at 7%.
The Bank said the improvement in the longer-term inflation forecast provided room to the monetary policy committee (MPC) to pause in the tightening cycle.
Although the expected consumer price index (CPI) average for 2016 was revised upwards to 6.7% from 6.6%‚ the 2017 CPI forecast was revised down to 6.2% from 6.4%. It revised the average 2018 CPI forecast to 5.4% from 5.5%.
The rand weakened sharply to R15.9796/$ from $15.8192/$ within minutes of the rates decision announcement‚ but thereafter firmed gradually. At 3.56pm the rand was at R15.8568 from the previous close of R15.8750.
It was at R17.7581 against the euro from R17.8019 previously‚ and at R23.1484 against the pound from R23.1658 previously.
Investec chief economist Annabel Bishop said the rand could weaken to R19.30/$ in the fourth quarter as the local currency approached a down case scenario.
“This case entails the loss of the country’s investment-grade status and as concern escalates that the finance minister would not be able to remain in his role to complete the fiscal consolidation he has outlined‚” she said.
Rand dips‚ but recovers as rates remain on hold
The rand weakened against the dollar on Thursday after the Reserve Bank kept the repo unchanged at 7%.
The Bank said the improvement in the longer-term inflation forecast provided room to the monetary policy committee (MPC) to pause in the tightening cycle.
Although the expected consumer price index (CPI) average for 2016 was revised upwards to 6.7% from 6.6%‚ the 2017 CPI forecast was revised down to 6.2% from 6.4%. It revised the average 2018 CPI forecast to 5.4% from 5.5%.
The rand weakened sharply to R15.9796/$ from $15.8192/$ within minutes of the rates decision announcement‚ but thereafter firmed gradually. At 3.56pm the rand was at R15.8568 from the previous close of R15.8750.
It was at R17.7581 against the euro from R17.8019 previously‚ and at R23.1484 against the pound from R23.1658 previously.
Investec chief economist Annabel Bishop said the rand could weaken to R19.30/$ in the fourth quarter as the local currency approached a down case scenario.
“This case entails the loss of the country’s investment-grade status and as concern escalates that the finance minister would not be able to remain in his role to complete the fiscal consolidation he has outlined‚” she said.
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