South African rand dips as dollar hits three-week high after Fed minutes

PUBLISHED: Fri, 19 Aug 2022 08:55:52 GMT
Alexander Winning and Bhargav Acharya
Waldo Swiegers | Bloomberg | Getty Images

JOHANNESBURG, Aug 18 (Reuters) – The South African rand fell on Thursday, extending the previous day’s losses, as the dollar bounced on investor uncertainty surrounding the pace of interest rate hikes by the U.S. Federal Reserve to tame inflation.

Federal Reserve minutes on Wednesday pointed to U.S. interest rates staying higher for longer, boosting the dollar and hurting emerging market currencies like the rand. Read full story

At 1536 GMT, the rand ZAR=D3 traded at 16.8050 against the dollar, down 1.13% from its previous close.

With no major domestic economic data releases on Thursday, the South African currency took its cue from global drivers as expected.

The dollar index =USD, which measures the currency against six rivals, earlier hit a three-week high following the Fed minutes and was last up at 107.07. Read full story

“A weakening U.S. economic environment places downwards pressure on global economic growth, and so on SA (South Africa) economic activity,” Investec analyst Annabel Bishop said in a research note, adding that local June retail sales were also a factor in the rand’s weakness.

June retail sales ZARET=ECI published on Wednesday registered a surprise fall, adding to evidence the economy performed poorly in the second quarter. Read full story

Next week the data calendar is busier with July consumer ZACPIY=ECI and producer ZAPPIY=ECI inflation, second-quarter unemployment ZAUNR=ECI and a leading business cycle indicator ZALEAD=ECI.

Shares on the Johannesburg Stock Exchange (JSE) ended marginally up in the absence of major catalysts, with the All-Share index .JALSH ending up 0.06% and the Top-40 index .JTOPI closing 0.03% higher.

The South African government’s benchmark 2030 bond ZAR2030= fell marginally, with the yield up 1.5 basis points to 10.185%.

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