The South African (SA) Rand softened in early trade on Thursday as a stronger Dollar and growing expectations of a further Federal Reserve rate hike weighed on risk-sensitive currencies, while investors awaited domestic mining production data.
The Rand traded at 16.62 against the Dollar, 0.2% down than its previous close.
Statistics South Africa is due to publish September mining production data, with economists expecting another contraction after output fell 12.7% year on year in August.
“We expect the weakness to persist into September as high input costs, compounded by steep fuel prices, and structural constraints continue to weigh on both sectors,” Nedbank economists said in a note.
The Dollar climbed to a 19-month high against major peers, supported by growing expectations of a United States (US) Federal Reserve rate hike.
Traders ramped up bets on further Fed tightening after stronger-than-expected October inflation data and a series of hawkish remarks from US central bank officials, who expressed concern over stubborn inflation and left open the possibility of a larger 50-basis-point increase.
Like other risk-sensitive currencies, the Rand often takes its cues from global factors, particularly US monetary policy, alongside domestic economic data.
SA’s benchmark 2035 government bond was steady in early deals, with the yield at 8.465%.
–Reuters–
