Ambitious, Broad, Deep and Flexible:
We’ve heard the words before. Now they’re in the right place. Theresa May in the past has levied criticism at the European Union for a lack of ambition within Brexit relations, refusing to think outside of the box of incumbent treatises to facilitate a post-Brexit relationship between the United Kingdom and the European Union. She has also accused her European counterparts of demonstrating a lack of flexibility in their approach to negotiations, unwilling to entertain ideas that might facilitate progress. Indeed, facing a domestic audience, Theresa May has frequently claimed she is seeking a broad and deep agreement that will support the UK through its exit from the bloc and continue to nourish the economy following its separation. Now, however, the words are not up in the air, accusations, or fantasy. They are the substance of a leaked document thought to be the agreement that the EU and UK will discuss and sign this Sunday in Brussels. The document sent Sterling markets through the roof, with almost 1% being added to the value of the Pound. Immediately, comments from the European Union suggesting that there remain inhibitions to the Brexit deal threw the Pound back down to the lows of its open. In yet another rollercoaster move, the domestic currency recovered to hold its value for the rest of the day.
Good value in the Rand has been found this afternoon following the two-day meeting of the South African Reserve Bank, the private body responsible for domestic monetary policy. Despite the relatively new recession in Africa’s largest economy, the Reserve Bank has chosen to raise rates by 25 basis points bringing the yearly interest reward/cost of money within the South Africa to 6.75%. The increased reward for holding the domestic currency attracted attention and demand to it, with the currency gaining 1.7% versus the US Dollar since market open. In an unexpected move, the actions of the central bank today have helped to secure the recovery of the Rand following the emerging market currency crisis of September.
Today’s Global Market:
Discussion and Analysis by Charles Porter