South African Rand Drops Versus Majors as Gold Drops
The South African rand weakened against its major crosses, trading at R16.50 per dollar, R19.34 per euro, and R22.30 per pound, First National Bank (FNB) said in its morning brief on Wednesday.
Trade relations with the US, following the tariff adjustment and geopolitical conflict, have continued to impact South African currency pairs against the US Dollar, Euro, Yen, and British Pound.
The South African rand underperformed emerging-market peers as a stronger dollar and surging oil prices, driven by President Donald Trump’s warning that the United States (US)-Iran ceasefire remains fragile, pressured the local unit.
Movements in gold and oil prices have a major influence on how the local unit performs against Western currencies, Lagos-based FX traders said in a chat with MarketForces Africa.
Gold dropped to around $ 4,698.58 per ounce as stronger-than-expected US inflation (3.8% in April) dampened hopes for Federal Reserve rate cuts, with higher energy costs linked to Middle East tensions driving prices higher.
Brent crude dipped to $106.41 per barrel this morning, ending a three-day rally despite supply concerns from the ongoing Middle East conflict and disruptions in the Strait of Hormuz.
Rising energy prices also pushed US inflation higher, with trade talks between the US and China taking priority over the conflict.
US inflation jumps to 3.8% as energy costs surge from the Iran war, the statistics office said in a report released. US prices rose in April at their fastest rate since May 2023, as the impact of the war in Iran increasingly weighed on consumers.
A jump in the cost of gasoline and groceries pushed the consumer price index (CPI), showing the rate of price increases over the past 12 months, to 3.8%.
It is the highest level since inflation hit 4% three years ago. The Bureau of Labour Statistics (BLS) said almost half of the rise was driven by surging energy costs, while housing and food costs also contributed. Global Markets Rattle by U.S. Inflation, Ceasefire Hiccups
