The rand bounced then fell again
came under pressure this morning following signs of strength in the currency last night.
Last night, minutes from the latest monetary policy meeting in the US suggested that there was “no hurry to raise interest rates,” says IOL
. This hit the dollar, which helped the rand strengthen slightly.
But this morning, nagging worries over “growth in China and lower commodity prices” put renewed pressure on the local currency, adds IOL
. This offset any of the benefits of the US putting off hiking interest rates.
The US Federal Reserve’s move in September is still under scrutiny, notes BDLive
. Officials haven’t provided a “clear sign that they will move at the next policy meeting”.
But concerns over what’s happening in China is weighing heavily on the rand, notes IOL
The rand slide looks set to continue
Standard Bank’s emerging markets currency trader, Warrick Butler, says the “market is pricing in more pain than is actually prevalent in market conditions,” reports Fin24
. And the rand’s deterioration “isn’t going to go away anytime soon”.
The rand has weakened significantly over the past couple of weeks.
With nothing positive on the horizon for SA at the moment, Mr Butler believes the South African Reserve Bank needs to hike interest rates to stop the rand sliding further, adds Fin24
. He said that with the rand so weak and “volatility so low, it indicates that interest rates are too low”.
At time of writing, the rand was trading at R12.96 to the dollar, R14.42 to the euro and R20.31 to the pound.
Could the rand break through R13 to the dollar today? Time will tell.
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