Rand dips as Fed concerns resurface
SA’s rand fell on Wednesday as the dollar rose on fresh expectations of an early US Federal Reserve rate hike.
|||Johannesburg - South Africa's rand fell to a two-month low on Wednesday as the dollar rose on revived expectations of an early Federal Reserve rate hike after data suggested the US economy is regaining momentum.
At 06h45 GMT, the rand traded at 15.7200 versus the dollar, 1.08 percent weaker from Tuesday's New York close. It earlier hit a session low of 15.7600, its weakest level since March 16, according to Thomson Reuters data.
“Dollar gains rather than domestic politics are the driver,” Rand Merchant Bank analyst John Cairns said in a note.
“The Fed remains very much in focus today. The minutes from the last Fed meeting, to be released tonight, should give us an indication of how strongly voting members believe in their own forecast of two rate hikes this year.”
The rand has been under pressure since Monday, weighed down by domestic political uncertainty after a news report that Finance Minister Pravin Gordhan faced arrest.
Gordhan is being investigated by police over the creation of a covert surveillance unit in the revenue services during his time as head of the agency.
Gordhan said on Tuesday reports of his imminent arrest amounted to an attack on the Treasury. He was due in parliament later in the day for a debate on the budget, in his first public appearance since the arrest reports.
Locally, focus was on April consumer price inflation and March retail sales numbers due later in the day, as well as an interest rate decision on Thursday.
Government bonds weakened, with the yield for the 2026 benchmark adding 7 basis points to 9.455 percent.
REUTERS