The rand weakened against the strong dollar yesterday as investors assessed the US Federal Reserve’s hawkish stance on monetary policy tightening.
This after the dollar hit a 20-year high on Monday.
By 5.21pm the rand was trading at R16.92, weaker than the previous day where the rand was bid at R16.84 at 5pm.
The dollar has been supported by aggressive rate hikes by the Fed in an effort to reel in decades-high inflation.
Some traders had bet the Fed would pivot to a more accommodative stance early in 2023, but those expectations were dashed on Friday when Chairman Jerome Powell said at the Jackson Hole conference in Wyoming that the central bank would raise rates and keep them high for some time.
“The dust is finally settling now post-Jackson Hole, and the question for markets is, what’s going to change the narrative? And an argument is it’s Friday’s payroll, so we’re seeing a bit of a consolidation of last week’s move playing out here,” said Simon Harvey, an FX market analyst at Monex Europe.
The euro edged higher but failed to remain above parity, as markets priced in super-sized interest rate hikes by both the US Federal Reserve and the European Central Bank.
Earlier in the day Andre Cilliers, a currency strategist at TreasuryONE, said, “This morning we have the local currency trading at R16.85, and we expect further consolidation in an R16.70/R17.00 range for now, with traders following any dollar moves.“
- Reuters and Staff Reporter