In a clear sign that not all Russians support Vladimir Putin’s war demand for one-way flights out of Russia skyrocketed yesterday after he announced the call up of 300?000 more troops, with tickets costing 9 times the normal price to some destinations such is the demand.??
These are the mid rates at 6:30 today:
Brent Crude = $90.40 per barrel
- The Rand is desperate for an exit from Dollar dominance but unfortunately that looks highly unlikely for some time to come.?After trading sideways for most of the day we had the briefest spike to R17.55 to the Dollar just after the FED announcement, but the Dollar came roaring back sending us to R17.79.
- The Dollar was bid up ahead of the June FED meeting thanks to speculation of a 100bps hike and then fell back when Jerome Powell confirmed that 75bps was as big as the FED intended on going, but no such luck yesterday.?The FED, as was widely expected, hiked by 75bps for a third time in a row, and even though this fell short of the 100bps forecast by a small number of analysts his tone in the press conference was assertive enough to send the Dollar higher.?The Dollar Index hit a fresh 20 year high of 111.70 while the Rand, along with all other currencies and risk assets, took another hit.??
- Yesterday’s 75bps hike was yet another big interest rate move by the FED but what was equally damaging for the Rand was the FED’s projection for future hikes.?The FED expects to lift US rates by another 1.25% before the end of 2022 which given that they only have 2 more meetings left, November and December, that implies another 75bps in November and then 50bps in December, which is a lot.?Powell went on to say that the FED sees rates at 4.6% by the end of 2023 implying zero rate cuts next year, and all of this was music to the Dollar’s ears.??
- The following is from CNBC:??The Dollar surged to a fresh two-decade high and Asian stocks hit a two-year low on Thursday as the prospect of US interest rates rising further and faster than expected spooked investors. "The FED is not going to stop any time soon and there's going to be an extended period of restrictive monetary policy for at least the next year or so," said Sally Auld, chief investment officer at wealth manager JB Were. What else do you buy except for the US dollar at the moment?"?
- The Dollar’s purple patch continues but locally all eyes turn to SARB governor Lesetja Kganyago as he delivers our monetary policy statement this afternoon.?South Africa’s inflation story, while above target, is a lot better than what is going on across developed markets with our headline CPI falling from 7.8% to 7.6% yesterday.?Encouragingly, our month-on-month number fell from 1.5% to 0.2% which is a big reduction, but the SARB looks set to deliver another 75bps hike today more as a function of what’s going on internationally than here at home.?Hopefully the Rand gets a boost today, and is able to hold onto the gains.?
- The following is from Business Day:??Nedbank chief economist Nicky Weimar said the Dollar has benefited from the FED’s “aggressive interest rate hikes” and growing fears that the world economy could slip into a recession on a combination of sticky global inflation, much tighter monetary policies, continued lockdowns in China, and energy shortages in Europe. “The Reserve Bank will therefore remain in a hawkish state of mind. We forecast another 75bps hike for Thursday, followed by 50bps in November,” Weimar said.
- Local market data today sees our interest rate announcement at 3pm.
- Possible USD mid rate trading ranges in the Rand today are R17.60 and R17.90.?