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$/R Exchange rate

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Not applicable
Some are predicting a 50 pt rate cut. Does this weaken the R as it becomes less attractive to foreign investors, or is that too small an issue in the greater scheme of things?
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10 REPLIES 10
cheapcheap
Regular Contributor
yes,i watched cnbc last night and according to a guy they had on, 75% of the market is expecting a rate cut but he thinks there is no chance.If I know the sarb,they are always behind the curve and will not cut today...maybe at the next meeting.But to get back to your question,the carry trade becomes less attractive,therefore less capital inflows...less bemand for rands,but there are many other factors too,but yes it will weaken.
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kwagga
Super Contributor
Personally I hope we don't get a rate cut. It's an election year, and you never know what the real reason is behind the cut. Is it a gift from the underperforming government to buy votes, or is it an economic necessity based on sound principles ?
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SimonPB
Valued Contributor
What election ?? You mean ANC conference ?? Totally different drivers
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SimonPB
Valued Contributor
It not about the carry trade, it about yield an cut or not won't impact that ..
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cheapcheap
Regular Contributor
it's the same thing
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SimonPB
Valued Contributor
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DEP
Super Contributor
No election in this country - ANC insiders (ANC provincial leaders etc)votes for the next leader.
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CHATTYCHAT
Super Contributor
Yes, not even close!
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CHATTYCHAT
Super Contributor
Question is if a rate cut will impact on the value of the Rand relative to other currencies. However marginal the influence of a 50 pt rate cut might be, in the end the SUPPLY/DEMAND economic theory must prevail. Unfortunately in our modern system the economy is influenced by the ability to manipulate structures according to pre programmed responses depending on the stimuli which will trigger a particular response. This manipulation deteriorise the ability of free market mechanisms to arrive at an equalibrium. Thinking 6 months ahead, if anything has to be gained by the end of this year with a view to gaining momentum in '2013 NOW is the time to adjust the repo.
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kwagga
Super Contributor
Ja, that was kinda what I meant.
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