South African Rand Dips Ahead of Rate Hike Expectation
The South African rand (ZAR) depreciates against crosses such as the US dollar, Euro, and sterling on Thursday ahead of the Reserve Bank’s interest rate policy decision.
The local unit is changing hands at R16.46 to the dollar, R19.08 to the euro and ~R22.01 to the pound on Thursday, First National Bank (FNB) said in a brief today.
The local unit is trading weaker as traders continue to monitor developments in the Middle East and look ahead to the South African Reserve Bank’s (SARB) interest rate decision this morning, with the market pricing in a 25-basis-point hike.
The country’s headline inflation rate accelerated to 4% in April amid tight labour market conditions and uncertainties about the economic outlook, with the latter anchored in global trade conditions.
The local units with exposures to oil price movement reacted negatively following United States airstrikes on Iranian military bases, which dampened hopes for a peace deal and kept inflation risks elevated.
Gold price declined Thursday due to renewed tensions in the Middle East as the U.S and Iran engaged in airstrikes near the Strait of Hormuz.
Hence, crude oil prices surged as heightened tensions in the Middle East reignited supply concerns. Brent crude is trading at $98.00/barrel. Also, the bullion extended losses, falling for a third consecutive session. Gold is trading at ~$ 4,372 per ounce.
Investors anticipate the release of South Africa’s April Producer Price Index data today. Later in the day, attention turns to the South African Reserve Bank’s interest rate decision at 15:00, after key US GDP and labour market data at 14:30. #South African Rand Dips Ahead Of Rate Hike Expectation
U.S., Iran Trade Attacks Near Strait of Hormuz Amid Ceasefire
