The South African (SA) Rand weakened in early trade on Friday, pressured by a firmer Dollar and hawkish signals from the United States (US) Federal Reserve that dampened appetite for riskier assets.
The Rand traded at 16.50 against the Dollar , about 0.3% down from its previous close.
The currency came under pressure as investors reassessed expectations for US interest rates, with Fed officials signalling that borrowing costs may need to remain elevated for longer to curb inflation.
The greenback strengthened against a basket of currencies, rising to a one-year high.
Analysts have said that the Dollar advance reflects a sharp repricing of US rate risk rather than safe-haven demand.
“Upside surprises in payrolls and persistently low layoffs reinforced the view that the US economy can tolerate tighter policy, while cheaper Brent crude failed to offset higher short-term US yields. For SA, this keeps Dollar liquidity expensive and caps Rand rallies,” said ETM Analytics in a note.
SA’s benchmark 2035 government bond was also weaker in early deals, as the yield rose 5 basis points to 8.32%.
–Reuters–
