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South African rand firms after central bank rate surprise

By Reuters_News

14:10, 30 March 2023

South African Rand coins are seen in this illustration picture taken October 28, 2020.
South African Rand coins are seen in this illustration picture taken October 28, 2020.

- South Africa's rand strengthened against the dollar on Thursday after the central bank raised its main interest rate by a higher than forecast 50 basis points to 7.75%.

At 1344 GMT, the rand traded at 17.8000 against the dollar, 1.78% stronger than its previous close.

A majority of economists polled by Reuters had expected the South African Reserve Bank to announce a 25 basis point increase.

"Recent polls showed the vast majority of economists were predicting a 25 bps increase, with an outside expectation of no change," said Rand Swiss Portfolio Manager Gary Booysen.

On the Johannesburg Stock Exchange, the blue-chip Top 40 index .JTOPI was last down 0.03% higher, while the broader all-share index .JALSH fell 0.04%.

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Statistics South Africa data showed last week that February inflation rose to 7.0% year on year from 6.9% in January, remaining above the bank's target of between 3% and 6%.

The government's benchmark 2030 bond was stronger, with the yield down 5 basis points to 9.865%.

 

Reporting by Anait Miridzhanian and Tannur Anders;
Editing by Bernadette Baum and James Macharia Chege

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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