South Africa's rand retreats on rate uncertainty - CNBC Africa

South Africa's rand retreats on rate uncertainty

Financial

by Reuters 0

South Africa's rand retreats on rate uncertainty. PHOTO: Money101

South Africa's rand weakened against the dollar on Monday as investors cautiously awaited a borderline local interest rate decision this week and the greenback gained on hopes of U.S. monetary tightening soon.

At 0602 GMT, the rand was over half a percent weaker at 12.4270 against the dollar compared to Friday's New York close of 12.3555.

The rand on Friday hit its strongest level in two weeks but failed to break through a key resistance level of 12.3000/dollar.

A Reuters poll last week suggested the South African repo decision will be a close call on Thursday with 17 economists forecasting an increase in interest rates, while 15 expected the central bank to keep rates on hold.

"In the absence of anything new lets revert to tried and tested: interest rate differentials and the resurgent dollar," said Maemo Rametse, a forex trader at Standard Bank.

"Yellen, Carney and Kganyago are talking a big book, but will any of them walk the talk and if so who first," added Rametse, referring to when rates could rise in South Africa and the U.S.

The Fed has kept its short-term interest rate near zero for more than six years but analysts believe the Fed will begin increasing rates from September.

The yield on the 2026 bond was up 4.5 basis points to 8.100 per cent.

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