Rand moves weaker in late afternoon trade on Thursday after European Central Bank decision to cut rates to record low 0,75%
THE rand weakened on Thursday against the dollar for the second consecutive day on the decision by the European Central Bank (ECB) to cut rates.
The bank cut rates by 25 basis points to a record low of 0,75%, "but refused to do anything else to address the eurozone confidence crisis", said Holger Schmieding, chief economist at London-based Berenberg Bank.
"The ECB neither announced new liquidity initiatives nor dropped any hint that it may intervene again in sovereign bond markets to break the cycle of fear that is engulfing Spain and Italy," he said.
At 4.39pm, the rand was trading at R8,1427 to the dollar from its previous close of R8,1304. The local currency was bid at R10,082 to the euro from a previous close of R10,1752 and at R12,63 against sterling from R12,6713 before.
The euro was bid at $1,2381 from a previous close of $1,2518.
"At the moment there is a healthy demand for dollars and there is still some uncertainty in Europe," said Ian Cruickshanks, head of Treasury strategic research at Nedbank .
ECB president Mario Draghi acknowledged that the eurozone’s debt crisis had led to a generalised economic slowdown, hitting even the strongest countries in the region, Dow Jones Newswires reported.
Meanwhile, the Bank of England will pump another £50bn into the UK’s ailing economy in the latest attempt to jump-start growth and counter the effects of the debt crisis in the eurozone.
