Rand treads water ahead of current account figures
At 8.38am‚ the rand was at R15.3705 against the dollar from R15.3463 previously.
Against the euro‚ the rand was at R16.8958 from R16.8264 previously. It was at R21.8436 against the pound from R21.8161. The euro was at $1.0991 from $1.0990 previously.
The Reserve Bank will release current account data on Tuesday. The shortfall for last year is expected to have narrowed to 4% of gross domestic product (GDP) from 5.4% in 2014.
The rand tends to firm when the current account deficit narrows because investors see it as an indication that less money will be needed to finance the debt required to cover the deficit.
The current account shortfall in the fourth quarter compared with the third is expected to have remained stable at about 4.1% of GDP‚ according to a median consensus forecast from a survey of seven economists.
On Friday‚ currency markets responded positively to US employment data. The rand strengthened by about 30c.
US nonfarm payrolls for February overshot expectations of 190‚000 with a reading of 242‚000‚ from an upwardly revised 172‚000 in January. The unemployment rate remained steady at 4.9%‚ while labour force participation picked up to 62.9% from 62.7% in January. However‚ average earnings fell 0.1% month on month‚ down from growth of 0.5% in January.
The focus this week will be on the euro in the run-up to the European Central Bank (ECB) meeting.
Dow Jones Newswires said the likelihood of the ECB cutting interest rates deeper into negative territory‚ and possibly expanding its bond-buying programme‚ would be detrimental for the euro.
“It further diminishes the appeal of holding the negative-yielding currency‚” the newswires said. – Tiso Black Star Group Digital/BDlive
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