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Rand softer on US fiscal impasse
The rand remained on the back foot in Monday afternoon trade (14 October) due to the situation caused by the US debt-ceiling conflict. This has put some pressure on global markets‚ with emerging market currencies bearing the brunt of it.
The US has to raise its US$16.7trn debt ceiling by this Thursday (17 October) to fulfil its financial obligations‚ or risk a historic default.
On Monday afternoon the rand was bid at R9.9455 to the dollar from R9.8753 at Friday's close.
It was bid at R13.5072 to the euro from R13.4255 at its previous close‚ and was at R15.9163 against sterling from R15.8270 at the previous close.
The euro was trading at US$1.3586 against the dollar from US$1.3555 at Friday's close.
"If there is a massive meltdown in the US‚ emerging markets currencies like ours would suffer the most. If the global financial system is shaken‚ investors run to stable currencies such as the Japanese yen and the Swiss franc and the rand would weaken as a result‚" Bidvest Bank chief foreign exchange dealer Ion de Vleeschauwer said.
"Global markets are nervous at the moment and if the US can't come to an agreement about their fiscal impasse‚ investors will fly back to quality and we would enter a risk-off scenario. Global expectations are‚ however‚ for the US to reach a last-minute plan‚" he said.
Source: I-Net Bridge
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