Posted: 2007-04-30 23:57 Emerging market currencies  Presenter: Giulietta Talevi Guest(s): David Gracey Classic Business Day gets David Gracey, head of trading at Nedbank Capital, on the line about the emerging currencies in global markets GIULIETTA TALEVI: David, what did you make of the performance of the rand and the currency markets in general? It seemed to be quite an interesting place to be today… DAVID GRACEY: There’s uncertainty in the markets - unfortunately every time China makes some noise around their overheating economy that tends to affect all the emerging market currencies, and on top of that we’ve got a very confusing picture out of America at the moment with a slowdown in growth, and at the same time there’s an inflationary threat from energy prices which is all coming together to create some quite skittish markets. We saw the rand weaken to around 7.15 against the dollar in Asian trade late last night, and then strengthen to 7.03 this afternoon on the back of slightly better than expected trade numbers. It’s a very skittish market at the moment… GIULIETTA TALEVI: Do you think that was an overreaction to the trade numbers given it was so much weaker before, and do you think in the next couple of days we might see the rand going back to its weaker levels, or do you think these trade figures will keep the rand on a fairly even keel or a stronger footing? DAVID GRACEY: I think the trade numbers are always going to create a little bit of apprehension in the market given our current account situation - I guess what the market is looking to see is if the sustained weaker rand over a long period of time now is creating opportunities for exporters, which will obviously eventually reduce that current account deficit. That number is notoriously difficult to predict - it seems to be one good, then one bad - but it’s more about the trend essentially, and we have seen very high current account numbers for a long period of time now. So it’s very difficult to see where the rand is going to find a lot of strength - I believe that we will see a gradually weakening rand over the rest of the year. GIULIETTA TALEVI: An article on Bloomberg earlier had a fairly interesting headline saying the “zloti, peso, won, and rand have never looked better to traders” and arguing that investments in emerging market currencies have never been safer - but you’re saying the rand has been particularly skittish, and you see it weakening to the end of the year - what do you make of that statement? DAVID GRACEY: Talking to international investors for the last three years or a bit longer the song they’ve been singing is all about higher yields, and the tone of the articles we’re seeing now is that there’s a possibility of rate cuts in the US sooner rather than later given the latest US GDP numbers, and Japan is certainly not steaming ahead so their rates will stay lower for longer - as a result the yield plays are always in vogue. However, what we are seeing is countries like Australia are a far safer bet, the UK certainly seems to think their rates can go up a little higher - so I’m not so certain that it is as safe an investment for international investors. Transcripts editor: onsub1@johncom.co.za mon/met Comments Related to this transcript: Comment on this transcript... Name : Email : Comments :