Rand, emerging market currencies lift on European Central Bank’s QE
JOHANNESBURG (miningweekly.com) – The South African rand along with the Russian rouble, the Brazilian real and the Turkish lira all strengthened against the euro after the European Central Bank (ECB) launched its landmark €60-billion a month bond buying programme, the Financial Times reported late Thursday.
The quantitative easing (QE) measure, which mimics earlier US Federal Reserve QE action, saw the South African rand strengthen by 1.1% – the lowest of the four emerging market countries mentioned – with the Russian rouble the highest at 1.4%.
The euro also fell more than 1% against the US dollar after the announcement of the new €1.1-trillion debt-buying measure.
While ECB president Mario Draghi pledged to buy government bonds as part of an asset-purchase programme to counter deflationary pressures, US Standard & Poor’s 500 Index stocks rose in New York and the blue-chip DAX stock index hit a new high in Germany, Bloomberg and Deutsche Welle reported.
German broadcaster Deutsche Welle described the QE decision as one that would involve the printing of €60-billion a month from March until September 2016, to finance large-scale purchasing of public and private assets.
From March, the eurosystem would, Draghi said, begin to buy euro-denominated investment-grade securities issued by euro area governments and agencies and European institutions in the secondary market, and that buying would continue until economic conditions improved.
ECB, he added, would be buying bonds with maturities spanning two to 30 years.
The Wall Street Journal described the decision as marking the beginning of a new era for the conservative German-modelled ECB, against the background of the eurozone’s $13-trillion economy failing to recover fully from the 2008 global financial crisis.
In November, the eurozone’s unemployment rate of 11.5% was far higher than that of the US and UK.
Until now, the ECB has largely refrained from QE, relying instead on interest rate cuts and loans to banks as a means of steering new credit to the economy, said observers, who contended that any strengthening of the European economy would help commodity prices, which are currently severely constrained.
Comments
Press Office
Announcements
What's On
Subscribe to improve your user experience...
Option 1 (equivalent of R125 a month):
Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format
Option 2 (equivalent of R375 a month):
All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors
including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.
Already a subscriber?
Forgotten your password?
Receive weekly copy of Creamer Media's Engineering News & Mining Weekly magazine (print copy for those in South Africa and e-magazine for those outside of South Africa)
➕
Recieve daily email newsletters
➕
Access to full search results
➕
Access archive of magazine back copies
➕
Access to Projects in Progress
➕
Access to ONE Research Report of your choice in PDF format
RESEARCH CHANNEL AFRICA
R4500 (equivalent of R375 a month)
SUBSCRIBEAll benefits from Option 1
➕
Access to Creamer Media's Research Channel Africa for ALL Research Reports on various industrial and mining sectors, in PDF format, including on:
Electricity
➕
Water
➕
Energy Transition
➕
Hydrogen
➕
Roads, Rail and Ports
➕
Coal
➕
Gold
➕
Platinum
➕
Battery Metals
➕
etc.
Receive all benefits from Option 1 or Option 2 delivered to numerous people at your company
➕
Multiple User names and Passwords for simultaneous log-ins
➕
Intranet integration access to all in your organisation