Rand Firmer on Improved Investors’ Appetite for EM Currencies
South African rand is trading slightly firmer on Thursday as softer-than-expected US producer price inflation reinforced expectations that the Federal Reserve may delay further interest rate hikes.
Lower inflation has weighed on the US dollar and improved investor appetite for emerging-market currencies, supporting demand for the rand, said First National Bank (FNB) in a brief.
The bank said the South African rand is changing hands at R16.34 to the US dollar, R18.73 to the euro and R22.10 to the British pound.
Geopolitical tension has shifted global market dynamics. The energy crisis has heightened inflationary pressures, which are expected to be met with interest rate hikes in major economies.
South African Reserve Bank is expected to hike rates as markets project a further surge in headline inflation. In the global commodity market, oil prices remain elevated as the US intensifies strikes on Iranian military targets, including facilities near the Strait of Hormuz, raising concerns about potential disruptions to global energy supplies.
The conflict has heightened fears of supply shortages, while a decline in US crude inventories has provided additional support to prices.
Despite these bullish factors, Brent crude has eased slightly after rallying strongly over recent sessions. Brent crude oil is trading at US$84.78/barrel.
The gold price is trading slightly lower this morning as rising oil prices have renewed concerns that inflationary pressures could persist, reinforcing expectations that US interest rates may remain higher for longer.
Federal Reserve Chair Kevin Warsh reiterated that policymakers remain fully committed to restoring price stability and have no tolerance for persistently elevated inflation, weighing on demand for non-yielding assets such as gold. Gold is trading at $4 033/ounce. #Rand Firmer on Improved Investors’ Appetite for EM Currencies#
