Rand firms to 7.84 against US dollar

The rand was firmer against the dollar in noon trade on Thursday following a more-dovish-than-expected FOMC meeting, at which the Fed indicated that rates would stay at the their current all-time lows until the end of 2014.

“The FOMC announcement was quite a surprise,” a market analyst said.

“After that the dollar sold off quite strongly which supported the rand.”

“We continue to favour long rand positions but there could be some consolidation around 7.80,” the analyst added.

At 11:47 local time, the rand was trading at R7.8492 to the dollar from its previous close of R7.8736. It was trading at R10.3089 to the euro from R10.3133 before, and at R12.3081 against sterling from R12.3176 previously.

The euro was trading at US$1.3143 from its previous close of US$1.3106.

Meanwhile Dow Jones Newswires reported that the Federal Reserve had boosted market sentiment by saying it would likely keep interest rates low until at least late 2014.

Previously, the Fed had said it expected the period of exceptionally low rates to last until mid-2013, so an extension of the low-rate environment prompted market participants to increase their appetite for risk.

“Our own view is that low inflation, especially if commodity price comparatives continue to ease in 2012, should enable the Fed to be tending towards supporting the economy rather than [adopting a] tightening policy,” said Shore Capital.

It added that while economic growth had been better-than-expected in the US, Fed chairman Ben Bernanke's press conference on Wednesday highlighted the willingness and ability of the central bank to provide more stimulus.

“For the time being, we would suggest risk assets are supported by better than expected US economic data, and the European Central Bank's willingness for balance sheet expansion to stave off the sovereign debt crises,” added Shore Capital. - I-Net Bridge