South Africa's rand recovers as gold halts decline

by Reuters 0

South Africa’s rand recovered on Tuesday as the dollar paused a recent rally fuelled by falling gold prices and expectations of a U.S. interest rate hike as early as September.

At 0705 GMT the rand firmed 0.35 per cent to 12.3915 per dollar following an overnight close of 12.4350 in New York. In the previous session, the rand weakened to 12.4760.

The local unit was aided by a slight recovery in gold after prices for the precious metal plunged to 5-year lows over the weekend, allowing some reprieve for currencies in commodity exporting countries.

The dollar was weaker in early trade, with the index measuring it against a basket of major currencies down 0.03 percent.

South Africa’s Reserve Bank (SARB) begins its three day monetary policy meeting on Tuesday, with 17 of 32 economists polled by Reuters last week expecting the bank to lift lending rates when it announces its decision on Thursday.

“Currency movements were steered by expectations of what will happen at the SARB’s MPC meeting and the dramatic drop in gold prices over weekend,” analysts at NKC African Economics said in a note to clients.

Yields on government bonds continued to rise, with the benchmark paper due in 2026 adding 2 basis points to 8.17 percent.