Rand’s Record Plunge Seals Case for South African Rate Rise
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The rand’s slump to a record against the dollar has laid to rest any doubt traders were having about South African rate increases.
Forward-rate agreements, used to speculate on interest rates, are pricing in at least a 25 basis points rate increase at each of the next two policy meetings. Before the rand’s fall to as low as 14.0682 per dollar, the contracts predicted only a 50 percent probability of an increase next month.