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Rand Gains on Fed & ECB Stimulus

April 12, 2012 at 12:28 by Vladimir Vyun

African cape buffalo on 100-rand noteThe rand rose today, following two days of decline, on signs that the US Federal Reserve and the European Central Bank plan to stimulate their economies, supporting inflow of higher-yielding assets.

Janet Yellen, a member of the Federal Open Market Committee, said that the US economy needs stimulus despite signs of recovery:

I consider a highly accommodative policy stance to be appropriate in present circumstances. But considerable uncertainty surrounds the outlook, and I remain prepared to adjust my policy views in response to incoming information. In particular, further easing actions could be warranted if the recovery proceeds at a slower-than-expected pace, while a significant acceleration in the pace of recovery could call for an earlier beginning to the process of policy firming than the FOMC currently anticipates.

Earlier, Benoit Coeure, an executive board member of the European Central Bank, said the Bank may resume its program of sovereign-debt purchases.

USD/ZAR fell from 8.0000 to 7.9340 as of 12:28 GMT today.

If you have any questions, comments or opinions regarding the South African Rand, feel free to post them using the commentary form below.

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