The South African (SA) Rand was under pressure in early trade on Wednesday as higher oil prices fuelled inflation concerns, while investors awaited the United States (US) Federal Reserve’s policy decision later in the day for clues on the interest rate outlook.
The Rand traded at 16.68 against the Dollar, down 0.2% from its previous close
Oil prices rose more than 1% on Wednesday after an attack on a refinery in Saudi Arabia renewed concerns around supply risks from the major exporter.
Markets are awaiting the Federal’s policy decision, as well as Personal Consumption Expenditures data, a key inflation gauge closely watched by the central bank, on Thursday.
Traders largely expect the Fed to leave rates unchanged on Wednesday but are pricing in an 84% chance of a December rate hike, according to the CME’s FedWatch Tool.
Analytics said the Rand could weaken beyond the $17.00 level if rising oil prices and Fed-related pressures persist.
In the absence of major domestic data, the rand, like other emerging market currencies, tends to take direction from global factors, including US economic releases and geopolitical developments.
On the Johannesburg Stock Exchange, the Top-40 index was down about 0.2% in early trade.
SA’s benchmark 2035 government bond weakened in early deals, with the yield rising 2 basis points to 8.6%.
–Reuters–
