Swift interest rate hikes aimed at containing inflation in product and asset prices could cause another downturn in the slowly recovering economies of the United States and Europe, the head of the World Bank said. “Waiting for bubbles to burst and then cleaning up the aftermath is now a new lesson of what not to do,” World Bank President Robert Zoellick said in an article published in Wednesday’s Financial Times. “But tightening interest rates too abruptly — especially where recoveries are weak, such as in the U.S. and Europe — could trigger another downturn.” Zoellick noted that Australia’s central bank had already raised interest rates, which may put Asian countries with close links to Australia’s economy under pressure to follow suit. “But raising rates while the Fed keeps its rates close to zero would cause Asian currencies to appreciate. This would make their exports more expensive and decrease overseas sales, hurting recoveries based on exports.” He said there was also competition from China: “The renminbi is tied to a declining U.S. dollar that makes Chinese goods cheaper to buy than those of Asian rivals.” Current levels Rand / Usd 7.4000-7.4500 Rand / Euro 11.1400-11.1900 Rand / Sterling 12.3300-12.3800 Jpy / Rand 11.85-11.90 Jpy / Usd 88.38 Usd / Euro 1.4988 Gbp / Usd 1.66618 Gold $1 177.00 Expected ranges Rand / Usd 7.3500-7.5500 Rand / Euro 11.1000-11.3000 Rand / Sterling 12.2000-12.4000 Jpy / Rand 11.80-12.00 ]]> http://rdgbrokers.co.za/2009/11/gdp-outperforms-expectations/feed/ 0 http://rdgbrokers.co.za/2009/10/exchange-control-relaxed/ http://rdgbrokers.co.za/2009/10/exchange-control-relaxed/#comments Wed, 28 Oct 2009 13:37:29 +0000 RDG Brokers http://rdgbrokers.co.za/?p=300 After yesterday’s action the release of CPI today should be a non event. Market expectations are at 6.2 percent slightly lower than last month. However the big mover yesterday was the budget speech. Even though the relaxation of exchange control measures we perceived as positive the huge projected budget deficit over the next few years had a negative impact on the rand. It is clear that department of finance also prefer a weaker rand. Taking all these negative factors in consideration the rand actually performed well to be at 7.67/$ this morning. Euro and gold dropped so a move toward 7.80/$ is possible.

U.S. Treasury Secretary Timothy Geithner on Tuesday said the dollar would remain the world’s main reserve currency for a long time as the country takes the right measures to support the economy. “I think the dollar will remain the principal reserve currency for a long period of time,” Geithner said at a conference sponsored by the Securities Industry and Financial Markets Association in New York. However, he also said the dollar’s position is not a privilege and comes with responsibilities and obligations that the United States must uphold. Current levels Rand / Usd 7.6500-7.7000 Rand / Euro 11.3300-11.3800 Rand / Sterling 12.5300-12.5800 Jpy / Rand 11.90 -11.95 Jpy / Usd 91.33 Usd / Euro 1.4833 Gbp / Usd 1.6369 Gold $1 040.00 Brent $77.75 Expected ranges Rand / Usd 7.5800-7.7800 Rand / Euro 11.2500-11.4500 Rand / Sterling 12.4500-12.6500 Jpy / Rand 11.80-12.00 ]]> http://rdgbrokers.co.za/2009/10/exchange-control-relaxed/feed/ 0 http://rdgbrokers.co.za/2009/09/trading-a-little-quiet/ http://rdgbrokers.co.za/2009/09/trading-a-little-quiet/#comments Mon, 28 Sep 2009 15:45:29 +0000 RDG Brokers http://rdgbrokers.co.za/?p=266 South Africa’s rand traded sideways over the weekend. The local unit is trading almost unchanged from Friday afternoon. Trading should remain quiet with quite a few companies having financial year end or half year end. Gold is back below $ 1 000 and the euro is also weaker this morning, however we are still experiencing abnormal trading conditions as traders still await the introduction of the proceeds of the MTN/Bharti transaction. While the transaction is still pending fundamentals will be ignored.

Restoring economic growth is more of an immediate priority than tackling currency imbalances, French Economy Minister Christine Lagarde said on Sunday. Lagarde told French television that the G20 will be the forum where global currencies are discussed and said the euro must not be made to suffer at the expense of the U.S. dollar and Chinese Yuan. But she added that this was not her most pressing concern. Current levels Rand / Usd 7.4500-7.5000 Rand / Euro 10.9000-10.9500 Rand / Sterling 11.8000-11.8500 Jpy / Rand 11.95-12.00 Jpy / Usd 89.35 Usd / Euro 1.4611 Gbp / Usd 1.5830 Gold $989.00 Brent $64.60 Expected ranges Rand / Usd 7.4000-7.6000 Rand / Euro 10.8500-11.0500 Rand / Sterling 11.7500-11.9500 Jpy / Rand 11.90-12.10 ]]> http://rdgbrokers.co.za/2009/09/trading-a-little-quiet/feed/ 0 http://rdgbrokers.co.za/2009/08/traders-on-the-fence/ http://rdgbrokers.co.za/2009/08/traders-on-the-fence/#comments Tue, 25 Aug 2009 10:16:00 +0000 RDG Brokers http://rdgbrokers.co.za/?p=240 South Africa’s rand was once again to break below the7.70/$ resistance and profit taking after the rally saw the local unit to weaken towards 7.90/$. Traders will be waiting for important economic data locally as well as the U.S. for further clues on currencies. In the meantime we will probably remain range bound. The yen headed higher on Tuesday as share markets fell and investor interest in higher-yielding currencies ebbed, while currencies took in their stride news that Federal Reserve chief Ben Bernanke would be reappointed. A U.S. administration official said President Barack Obama would reappoint Bernanke for a second term as Fed chairman on Tuesday. The dollar showed little reaction to the news as market participants had thought there was a good chance Bernanke would be given a second term to reassure financial markets as they recover from the global economic crisis, analysts said.

Current levels Rand / Usd 7.8100-7.8600 Rand / Euro 11.1500-11.2000 Rand / Sterling 12.8000-12.8500 Jpy / Rand 11.98-12.03 Jpy / Usd 94.12 Usd / Euro 1.4295 Gbp / Usd 1.6470 Gold $945.00 Brent $73.74 Expected ranges Rand / Usd 7.7500-7.9500 Rand / Euro 11.1000-11.3000 Rand / Sterling 12.7500-12.9500 Jpy / Rand 11.95-12.15

Nouriel Roubini, one of the few economists who accurately predicted the magnitude of the financial crisis, said on Thursday that the worst of the turmoil has passed. But Roubini emphasized the United States will still need a second fiscal stimulus, possibly by the end of this year, as the unemployment rate quickly approaches 10 percent. Developed economies are bottoming out or close to doing so, but the recovery will be anemic, with the United States remaining in recession throughout the year, said Roubini, who is chairman of RGE Global Monitor

Current levels
Rand / Usd
8.0700-8.1200
Rand / Euro
11.4000 – 11.4500
Rand / Sterling
13.2500 – 13.3000
Jpy / Rand
11.51- 11.56

Gold
$937.00

Brent
$63.53

Expected ranges

Rand / Usd
8.0000-8.2000

Rand / Euro
11.3500-11.5500

Rand / Sterling
13.2000-13.4000

Jpy / Rand
11.45-11.65

Courtesy of Accedinet Financial Solutions