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The rand plummets through R12/$ as the US reveals bumper jobs data

by , 09 March 2015

On Friday, the rand weakened to levels not seen for 13-years.

The rand, along with other emerging market currencies, suffered after the release of US non-farm payrolls data, which was better than expected.

Let's take a closer look at what's going on…

The rand hit levels not seen since 2002

On Friday, the rand plunged almost 2% to trade at R12.0650, reports Fin24. This is its lowest level against the dollar since 2002.

The US payrolls number for February beat expectations by 55,000, says BDLive. The US economy added 295,000 jobs during the month

This is the 12th month in a row that the US economy has “added more than 200,000 jobs,” reports the BBC. A run not seen “since 1994”.

Data also showed that the rate of unemployment “fell to 5.5% from 5.7%,” adds the BBC.

On the back of the news, the dollar hit “an 11-year high against the world’s major currencies,” adds Fin24.

Interest rate hikes in the US could see the rand weaken further

The uptick in jobs over the past year is “fuelling speculation the Federal Reserve is poised to start raising interest rates,” notes MoneyWeb. A rise in rates in the US will attract capital away from South Africa and other emerging markets.

This has a negative impact on investors’ risk appetite as they view emerging markets as “carrying higher risk,” notes Fin24.

Ion de Vleeschauwer, the chief forex dealer at Bidvest Bank, thinks the rand could fall “to R12.50 to the dollar,” says BDLive. He’s expecting the Federal Reserve to hike rates over the “next couple of months”.

At time of writing, the rand was trading at 12.05 to the dollar, 18.13 to the pound and 13.08 to the euro.

So time will tell how the rand copes with the week ahead and if it can claw back any of its losses from Friday.

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The rand plummets through R12/$ as the US reveals bumper jobs data
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