Yen rallies; is this the great carry unwind?

Rand Gains

The rand gained as Africa’s biggest economy recorded faster expansion, led by a recovery in mining and manufacturing.

Gross domestic product growth accelerated to 3.8 percent in the three months through December from an annualized 0.7 percent the previous quarter, the statistics office said in a report in the capital, Pretoria. The median estimate of 21 economists in a Bloomberg survey was 3.4 percent.

Stronger growth may ease pressure on fiscal targets to be set by Finance Minister Pravin Gordhan as he prepares to present his annual budget to lawmakers tomorrow.

“The GDP number increases the likelihood of a positive surprise on the revenue side that may impact on the deficit, and people are positioning for that,” Mohammed Nalla, head of strategic research at Nedbank Group Ltd., said by phone from Johannesburg. “We’re seeing some offloading of long-dollar positions.”

South Africa’s currency advanced 0.6 percent to 10.7299 per dollar, a fourth day of gains.

Ukraine Situation

Russia, which suspended its $15 billion aid package to Ukraine last week, opposes the inclusion of its first $3 billion tranche in a possible restructuring, Deputy Finance Minister Sergei Storchak told reporters in Moscow today. There’s a “slight” risk Ukraine won’t repay the first installment of the bailout and Russia is under no legal obligation to provide the remaining amount, he said.

“Ukraine may not be able to pay its debt and euro-dollar seems to be reacting a little bit of that,” Brad Bechtel, managing director at Faros Trading LLC in Stamford, Connecticut, said in a phone interview. “We’re not out of the woods yet in Ukraine. There’s question on domestic financing capability. We’ll see a lot more noise from them.”

Ukraine’s currency plunged as the nation’s parliament delayed a vote on a national unity government, creating a potential drag on efforts to obtain aid.

The hryvnia, which is managed by the central bank, weakened 6 percent to 9.7250 per dollar, extending its drop this year to 16 percent.

Dollar Down

The dollar fell as the Conference Board’s consumer confidence index decreased to 78.1 from a revised 79.4 in January that was weaker than initially estimated, the New York- based private research group reported. Another report showed home prices were increasing at a slower pace.

“There’s obviously still a lot of debate about how much is weather impacted or not, but the slide in the Surprise Index is still relevant,” said Jeremy Stretch, head of currency strategy at Canadian Imperial Bank of Commerce in London.

The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major currencies, fell 0.1 percent to 1,018.81. It has dropped 1.3 percent this month, the most since September.

 
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