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Welcome to FX-Pro.co.za, a South African site designed to assist individuals and companies involved with international trade. FX-Pro.co.za was launched in February of 2007 with the objective in mind of supplying a free and complete industry resource site for Africa.
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| | 5/6/2011 12:21:54 PM |
| | ZAR Commentary 06 May 2011 |
| | Yesterday's ECB decision and statement did induce volatility
not so much because of what ECB President Trichet said but
because of what he didn't say. In short, the market was
looking for indications that the ECB would be looking to hike
again soon and what they got instead was a simple comment
from Trichet to say that the markets had got it wrong. Given
that investors had been pricing in a steadily rising interest rate
differential between the eurozone and the US, this news
came as a bit of a wake-up call to those who believed that the
ECB would prioritise inflation above growth. For the carry
trade this has obvious implications. When two of the major
funding currencies of the world being the USD and the JPY
are both appreciating, the carry trade gets squeezed and that
certainly has been the case over the past two trading
sessions. Commodity prices, equities and EM currencies
have all come under some pressure however and this will be
reflected in those currencies with a link to commodities or
classified as an emerging market or, in the case of the ZAR,
both. According to Reuters data (bid chart), the ZAR finished
weaker vs. the USD on Thursday, closing at R6.7177 from
R6.6775 on Wednesday. The ZAR strengthened against the EUR, ending at R9.7658 from R9.8967 on
Wednesday, while similarly finished stronger against the GBP at R11.0070 from R11.0132 the previous day. |
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