RDG BROKERS » rates

Rand Holding Ground

RDG Brokers — Thu, 26 Nov 2009 12:15:01 +0000

South Africa’s rand continued to rally in late afternoon trade yesterday, after the euro broke back above 1.50 against the dollar. Gold is once again trading at an all time high this morning which is a further positive for the local unit. Inflation data released yesterday showed that CPI fell back into the MPC targets at 5.9 percent, however economists expect inflation to rise again. We have seen solid importer demand at current levels and we are back at levels where S.A. Reserve Bank is not comfortable with the rand’s strength, but with the higher commodity prices there could be scope for further strength. The dollar was under pressure on all fronts on Thursday, after breaking down to 15-month lows the previous day, and looked in peril of marking a 14-year low against the yen as Japan signaled it was watching but unlikely to step in. Dealers said short-term players continued to sell the dollar against the Japanese currency, after it fell to a 10-month low of 87.21 yen JPY= on Wednesday, although Japanese companies were buying dollars at the lower levels, helping keep it off the low. The catalyst for Wednesday’s breakdown, which took the greenback to a 15-month low against the euro and a basket of currencies, was an indication from the Federal Reserve that the dollar’s fall has been orderly and interest rates will stay low for some time. Market players said it was likely to remain under pressure in potentially volatile trading on Thursday, when U.S. markets are closed for Thanksgiving. But talk of an options barrier at 87.00 yen, as well as expected buy orders ahead of last January’s 13-year low of 87.10 yen, could lend it some support.
Current levels
Rand / Usd	7.3300-7.3800
Rand / Euro	11.1000-11.1500
Rand / Sterling	12.2500-12.3000
Jpy / Rand	11.75-11.80
Jpy / Usd	86.70
Usd / Euro	1.5105
Gbp / Usd	1.6688
Gold	$1 193.00
Expected ranges
Rand / Usd	7.3000-7.5000
Rand / Euro	11.0500-11.2500
Rand / Sterling	12.1500-12.3500
Jpy / Rand	11.70-11.90 article courtesy of Accredinet Financial Solutions

Investors cash In

RDG Brokers — Wed, 21 Oct 2009 16:24:55 +0000

We saw profit taking across the board as traders bought back short dollar positions on local and international currency markets. The rand gave back some of its gains versus the European currencies as well. Traders will close long rand positions ahead of the MPC rate announcement even though the general consensus is for rates to remain unchanged. Looking forward we have the mini budget coming up which could have an impact on the currency markets. The dollar stabilised on Wednesday, aided by profit-booking in rallying commodity-linked and higher-yielding currencies, after being pushed to a 14-month low against a basket of currencies the previous day. Traders said investors had been cashing in gains in the Canadian and New Zealand dollars, which hit their strongest levels in about 15 months this month, and in sterling, pushing them down about 0.2 percent against the greenback. The move helped the dollar climb further off a 14-month low against the euro after the single European currency failed to breach a psychological barrier at $1.50 the previous day. The dollar also got some support from profit-taking in Asian currencies, after markets in Brazil fell on a new government tax on foreign investments aimed at stopping the real from gaining. The Bank of Canada killed talk of an early rate hike on Tuesday, warning that favourable economic developments were being undermined by the Canadian dollar’s strength and sending the currency down sharply.
Current levels
Rand / Usd	7.3800-7.4300
Rand / Euro	11.0000-11.0500
Rand / Sterling	12.1000-12.1500
Jpy / Rand	12.20 -12.25
Jpy / Usd	90.68
Usd / Euro	1.4940
Gbp / Usd	1.6415
Gold	$1 056.00
Brent	$76.95
Expected ranges
Rand / Usd	7.3000-7.5000
Rand / Euro	10.9500-11.1500
Rand / Sterling	12.0000-12.2000
Jpy / Rand	12.15-12.35

Strong Rand??

RDG Brokers — Thu, 15 Oct 2009 09:03:40 +0000

The rand continued to steam ahead as the U.S. dollar falter on international currency markets. The euro is currently trading close to 1.50 to the dollar as investors are selling dollar assets. The local unit is currently trading in the lower 7.20/$ region, its strongest level in over a year after a brief visit here last month. Trading will remain uncertain, but we should see importer interest below 7.20/$. The interbank cost of borrowing dollars slipped on Wednesday after dovish comments from a Federal Reserve official reinforced expectations the U.S. central bank will maintain a loose monetary policy at least into next year. U.S. Federal Reserve Vice Chairman Donald Kohn made the case for a prolonged period of ultra-low interest rates late on Tuesday, saying the U.S. economy would not quickly snap back from its deep recession. Kohn’s comments followed remarks from Fed Chairman Ben Bernanke late last week, who said the central bank will need to tighten monetary policy as the economic recovery takes hold. Bernanke’s comments spurred a sharp selloff in the bond market and boosted the dollar on Friday as investors speculated the U.S. central bank could move to raise interest rates sooner than originally expected. Still, most U.S. primary dealers expect the Fed to hold off from raising the benchmark federal funds rate from its near-zero level until the second half of next year or later, according to a recent Reuters poll
Current levels
Rand / Usd	7.2200-7.2700
Rand / Euro	10.8000-10.8500
Rand / Sterling	11.6000-11.6500
Jpy / Rand	12.31 -12.36
Jpy / Usd	89.45
Usd / Euro	1.4959
Gbp / Usd	1.6065
Gold	$1 064.00
Brent	$74.65
Expected ranges
Rand / Usd	7.1800-7.3800
Rand / Euro	10.7500-10.9500
Rand / Sterling	11.5500-11.7500
Jpy / Rand	12.20-12.40

Watch the interest rates!!

RDG Brokers — Wed, 07 Oct 2009 09:47:07 +0000

South Africa’s rand continued to strengthen mainly on the back of positive emerging market sentiment. Higher rates in Australia send out a positive signal that we are entering into a higher interest rate cycle. There are rumours in the local market that MTN and Bharti are in private talks, which has not been denied or confirmed. This is probably the main reason for the rand’s strength. U.S. labor and manufacturing groups urged President Barack Obama on Tuesday to live up to his campaign rhetoric and formally label China a currency manipulator in a Treasury Department report due out next week. But Nicholas Lardy, a China economic policy watcher at the Peterson Institute for International Economics, said he’d be “shocked” if Obama took that step now. Obama faces his second decision on the currency issue in a semi-annual report due to Congress on Oct. 15. During last year’s campaign, Obama criticized then-President George W. Bush for repeatedly failing to label Beijing a currency manipulator, but then made the same decision in his first stab at the issue in April. Obama’s Treasury Department said China’s currency, the renminbi, remained “undervalued,” but Beijing had allowed the currency to rise 16.6 percent in real terms between June 2008 and the end of February 2009.
Current levels
Rand / Usd	7.4000-7.4500
Rand / Euro	10.9000-10.9500
Rand / Sterling	11.7500-11.8000
Jpy / Rand	11.89-11.94
Jpy / Usd	88.44
Usd / Euro	1.4715
Gbp / Usd	1.5915
Gold	$1 041.00
Brent	$69.15
Expected ranges
Rand / Usd	7.3500-7.5500
Rand / Euro	10.8500-11.0500
Rand / Sterling	11.7000-11.9000
Jpy / Rand	11.85-12.05

Interest Rates Unchanged

RDG Brokers — Wed, 23 Sep 2009 08:35:00 +0000

South Africa’s rand continued to strengthen yesterday after the MPC left interest rates unchanged. Market players probably interpret this as a sign that local rates have bottomed out. Comments made by Reserve Bank Governor that the rand is too strong at current levels are ignored as markets need action and verbal intervention only lasts for a few days. Inflation was lower but still above the 3 to 6 percent target range which was probably the deciding factor not to cut rates. China is appealing a World Trade Organisation ruling against its restrictions on imported films, books and other audio visual materials, adding to sparring following the United States’ imposition of safeguard tariffs on Chinese-made tyres earlier this month. With the two giant economies joined at the hip, the U.S.-China relationship is unlikely to unravel over any single product. Just a quarter century ago, “Made in China” products accounted for less than 1 percent of U.S. imports. Now, China’s high rate of savings is used to buy U.S. Treasuries, allowing Americans to keep buying Chinese-made exports. That in turn has driven tremendous economic growth in China and lifted hundreds of millions of Chinese out of poverty. China is now the largest holder of U.S. government debt, while the United States is China’s second-biggest trade partner. The intimate relationship between the two economies has marched in step with China’s opening up to the outside world over the last three decades. TRADE By 2008, U.S. exports to China totalled $69.7 billion, but were dwarfed by $337.8 billion in exports from China to the United States. The U.S. trade deficit with China has steadily grown since 1985, when its exports to China were worth $3.86 billion, just $6 million less than the value of Chinese shipments to the United States. Bilateral trade was less than $2.5 billion in 1979.
Current levels
Rand / Usd	7.3500-7.4000
Rand / Euro	10.9100-10.9600
Rand / Sterling	12.0700-12.1200
Jpy / Rand	12.26-12.31
Jpy / Usd	90.85
Usd / Euro	1.4800
Gbp / Usd	1.6375
Gold	$1 014.00
Brent	$70.15
Expected ranges
Rand / Usd	7.3300-7.5300
Rand / Euro	10.8500-11.0500
Rand / Sterling	12.0500-12.2500
Jpy / Rand	12.20-12.40

Interest rates too reduce?

RDG Brokers — Mon, 21 Sep 2009 08:24:54 +0000

South Africa’s rand weakened over the weekend and is currently trading around the 7.50/$ mark. Main factors causing the rand to weaken were softer European currencies, gold down $20 from recent highs and Cosatu doing their bit and try to block the MTN/Bharti transaction. Traders are also nervous ahead of the MPC announcement tomorrow, the meeting starts today. If Reserve Bank is serious about the strong rand, they will cut rates which will weaken the rand and help with economic growth……so they say? The United States wants the Group of 20 countries to put in place a set of policies that would lead to more sustainable global growth, according to a letter from a senior White House aide. “We should aim to adopt a policy framework to achieve sustainable and balanced growth,” Michael Froman, President Barack Obama’s top G20 adviser, wrote in a letter addressed to his G20 colleagues and obtained by Reuters. The proposal centers on fixing an imbalance in which some countries such as the United States have growth fueled largely by consumer spending while other countries like China have growth driven primarily by exports.
Current levels
Rand / Usd	7.4800-7.5300
Rand / Euro	10.9600-11.0100
Rand / Sterling	12.1000-12.1500
Jpy / Rand	12.26-12.31
Jpy / Usd	92.10
Usd / Euro	1.4665
Gbp / Usd	1.6170
Gold	$1 002
Brent	$70.65
Expected ranges
Rand / Usd	7.4300-7.6300
Rand / Euro	10.9000-11.1000
Rand / Sterling	12.0500-12.2500
Jpy / Rand	12.20-12.40

Markets Quiet

RDG Brokers — Tue, 01 Sep 2009 16:15:30 +0000

Markets were quiet yesterday due to the banking holiday in the U.K. We are still in a 7.70/$ to 7.90/$ trading range. The rand is trading closer to the lower end of this range after the euro and pound rallied overnight supporting the local unit. Credit growth continued to drop, however analyst expect rates to remain unchanged until we see inflation back within the 3-6 percent target range.

The yen held near a seven-week peak on the dollar on Tuesday, while the Australian dollar slipped after its central bank sounded less hawkish than some had anticipated. The Reserve Bank of Australia (RBA), holding its cash rate at 3.0 percent as expected, said the current low level of rates was appropriate, countering speculation it would adopt an explicit tightening bias.

Current levels
Rand / Usd
7.7200-7.7700

Rand / Euro
11.0900-11.1400

Rand / Sterling
12.6300-12.6800

Jpy / Rand
12.03-12.08

Jpy / Usd
93.30

Usd / Euro
1.4360

Gbp / Usd
1.6360

Gold
$955.00

Brent
$70.01

Expected ranges

Rand / Usd
7.6500-7.8500

Rand / Euro
11.0000-11.2000

Rand / Sterling
12.5500-12.7500

Jpy / Rand
11.95-12.15