South African rand edged a little steadier against the US dollar on Wednesday night before this year’s final rate-announcing gathering later today at 15:00 SA time in Pretoria.
The South African currency was 8.94 rand (about $1) against a basket of currencies including the greenback this morning. This was faintly steadier from Wednesday’s close of 8.95 rand.
The South African central bank, under the leadership of Gill Marcus, is likely to leave its yardstick rate unmoved at 40-year lows of 5 percent.
The aim is to boost the economy which is under pressure owing to a number of reasons, including the Eurozone debt crisis. Eurozone is South Africa’s trading partner.
Economists believe the severe drop in the local currency, together with information showing consumer inflation had speeded up in October, eliminated the possibility that the central bank will cut interest rates.
According to traders, the rand could continue to weaken above the 9.00 rand ($1) mark due to the continuing wage strike in the agriculture sector. This labour unrest came shortly after the most violent strike in South Africa’s mining sector.
The rand plummeted on Wednesday to its sharpest drop in three and a half years against a basket of currencies including the US dollar.
On the same Wednesday, the rand hit the 9.00 rand mark before rerating slightly as international stockholders chucked South African assets.
This followed the collapse of talks with global creditors on Greece’s aid, which battered the general risk appetite for investors.
But this situation can change after German Chancellor, Angela Merkel, said a deal was still possible next Monday when they meet again.