Cape Town – The South African rand has strengthened in early trading on Friday due to expectations that the US Federal Reserve will keep interest rates unchanged this month.
The rand’s recovery follows a previous session where it hit a record low but ended the day stronger based on positive US manufacturing data and comments from Federal Reserve officials.
According to IOL, the rand fell as low as 19.9075 on Thursday against the US dollar, worse than the previous record low of 19.8600.
“The rand remains entrenched in the R19.50/R20.00 range, but short-term risks remain for a breach of the R20.00 level as investor outflows continue and exporter inflows remain limited,” the report quoted Andre Cilliers, Currency Strategist at TreasuryONE as saying.
Reuters reported on Friday that At 08:45, the rand traded at 19.5875 against the dollar, around 0.2% stronger than its previous close.
The dollar, on the other hand, has weakened slightly against a basket of global currencies, the report said.
“The dollar was around 0.1% weaker against a basket of global currencies on Friday,” said the report.
Market indicators suggest a reduced likelihood of a rate hike by the Fed, resulting in a shift towards riskier currencies, the report said.
The rand experienced a turbulent May, losing over 7% against the dollar due to negative investor sentiment related to allegations of weapons supply to Russia and ongoing power cuts in South Africa.
In addition to these market developments, South Africa’s electricity minister will provide an update on efforts to address the power shortage, and the government will conduct auctions for inflation-linked bonds and Treasury bills.
The benchmark 2030 government bond in South Africa has seen little change, with a slight decrease in yield, said the report.
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Compiled by Betha Madhomu
