We had an extremely volatile session yesterday after the trade deficit was announced at almost 2 billion rand, much higher than the expected 300 million the rand started weakening. In late afternoon trade it was announced that the MTN/Bharti transaction has been cancelled, this caused panic buying by traders pushing the local unit towards 7.60/$. The euro is lower this morning and with all the negative news out the rand will remain under pressure.
German central bank Chief Alex Weber rejected on Wednesday calls for Berlin to help reduce global financial imbalances with policy action that would cut the country’s exports and current account surpluses. “This is not something policy should target or can target. It would mean intervening against optimal structures that have developed in a free market environment,” he told reporters during an economic seminar. Weber heads the German Bundesbank.