The rand retained a firmer bias in range-bound trade at noon on Tuesday, tracking the strong euro, but the market is awaiting the interest-rate setting meeting of the US Federal Open Market Committee (FOMC) later today
The rand retained a firmer bias in range-bound trade at noon on Tuesday, tracking the strong euro, but the market is awaiting the interest-rate setting meeting of the US Federal Open Market Committee (FOMC) later today.
At 11:49 local time the rand was bid at 7.0990 to the dollar, from 7.1293 at the previous close. It was bid at 9.3148 to the euro from 9.2973 before and at 10.9959 against sterling from 11.0551 at its previous close.
The euro was bid at US$1.3136 from $1.3065 overnight.
A trader said the local unit remained pretty much in a range, tracking the euro. "There is a possibility the rand could strengthen after the US rates decision," the trader said.
RMB currency analysts noted that the FOMC's policy meeting will probably outshine local events and could rouse the local currency, which remains trapped in a narrow range.
"Fresh data emanating from the US has been fairly balanced supporting our assessment of a moderation in the pace of US economic growth rather than an outright double-dip recession. Solid gains in retail sales coupled with a slight rebound in ISM manufacturing should dampen the possibility of additional quantitative easing, which we maintain would only be effective if adopted in response to additional fiscal stimulus," the analysts said.
RMB said that the Fed's downbeat assessment of the economy, expressed at August's meeting, is likely to remain unchanged as US consumption demand and investment growth remains muted. The absence of talk regarding a second round of asset purchases should provide some respite to the ailing US dollar and pose slight upside to US dollar/rand.
Dow Jones Newswires reports that the euro and the yen are stronger on Tuesday, the former because of successful bond and treasury bill auctions by euro-zone debtors and the latter because of end-of-quarter demand from Japanese exporters.
The dollar, meanwhile, was stuck in a fairly narrow range as investors squared positions just in case the U.S. Federal Reserve hints at further quantitative easing after its open market committee meeting later in the day.
Ireland's offering of €500m of 2014 bonds and €1bn of 2018 bonds proved a success, as did treasury bill auctions that raised €7.04bn for Spain and EUR390 million for Greece. In all three cases, the countries were able to raise funds with little difficulty at relatively competitive prices.
