* Rand gains nearly 1 percent on ECB liquidity injection
* Shrugs off wider-than-expected Jan trade deficit
By Xola Potelwa
JOHANNESBURG, Feb 29 (Reuters) – The rand firmed
nearly one percent on the dollar on Wednesday as risky assets
gained from a cash injection from the European Central Bank,
leading the local currency to shrug off a gaping trade deficit
number reported during the session.
The ECB’s three-year liquidity injection boosted the
risk-prone local unit as the money was expected to find a home
in emerging market assets such as the rand through carry trades,
where investors use lower-yielding currencies to buy riskier and
higher yielding assets.
The rand gained 0.6 percent on the euro and 0.9
percent on the dollar during the session.
South Africa’s trade account showed a gaping 13.5 billion
rand ($1.8 billion) hole in January, nearly 10 billion rand
wider than market expectations and the biggest trade deficit
since January 2009.
However the rand was hardly moved by the weak data.
“The trade data had limited impact on the rand, the long
term refinancing operation has provided nice cushions and
dollar/rand remains at fresh year-to-date lows,” said Gabor
Ambrus, emerging market analyst at 4Cast.
Continued…
