Friday 22 November 2013 06:09
Although the SARB did not think it 'appropriate to raise rates on this occasion', the perception in markets is that tightening has at least been put on the table. (SABC)
The rand firmed against the dollar on Thursday after Governor Gill Marcus acknowledged that a rate hike had been discussed at a meeting where the central bank decided against a move.
The rand was at 10.1400 to the dollar at 1515 GMT, marginally firmer than the previous day's New York close, after reaching a session high of 10.1100.
The yield on the 2026 government bond rose 9.5 basis points to 8.23% while that on the 2015 paper was 15 basis points higher at 6.11 %.
South Africa's Reserve Bank left its repo rate unchanged at 5 % citing risks to inflation from a weaker rand as the US Federal
Reserve starts cutting back stimulus, reducing dollar flows into emerging markets.
The decision was unanimous but Marcus said the Monetary Policy Committee had discussed raising rates.
"Although the SARB did not think it 'appropriate to raise rates on this occasion', the perception in markets is that tightening has at least been put on the table. Bond yields are up, and the rand is firmer as a result," said Razia Khan, head of Africa research at Standard Chartered.
There may be limited scope for the rand to consolidate its gains or move below 10, said Ion de Vleeschauwer, an FX trader at Bidvest Bank.
"The gains are unfortunately short-lived because of the import demand from locals and the dollar scenario globally does point to a stronger dollar going into next year," he said. "Sub-10 is going to be difficult for the rand to achieve."