Nicola Mawson
Ahead of last night's US Federal Reserve decision on interest rates, local economists were mostly expecting a 50 basis point (bps) cut, with some wavering towards 25bps, with either outcome likely to positively affect the local currency.
Bianca Botes, a director at Citadel Global, yesterday morning noted that the rand started the day at R17.59 to the dollar. By early afternoon, it had strengthened slightly to R17.54, just hours before the Feds decision.
Andre Cilliers, a currency strategist at TreasuryONE, said the local currency was trading at its strongest level this year. It remains to be seen whether this level will hold and if the rand could push a little further and test the R17.5000 level before the Fed announcement.
The question on everybody's lips, said Cilliers, was whether the cut would be 25bps or 50bps. One thing that is clear is that there will be a cut, but the size of the cut has been a bone of contention, especially in the last couple of days.
