South African Rand Softens, Stronger Dollar Weighs on EM Currencies
The South African rand softened against crosses on Wednesday as a stronger US dollar weighed on emerging-market currencies amid rising demand for safe-haven assets.
The local unit is softer following declining business indicators, an inflation surge and a potential interest rate hike by the South African Reserve Bank to anchor consumer inflation.
The dollar’s renewed bid reflects a more hawkish Fed tone and resilient US economic data, with most emerging-market currencies under pressure, First National Bank (FNB) said in a brief.
The bank stated that the rand is trading at R16.58 to the US dollar, R18.84 to the euro and R21.86 to the British pound. The dollar index closed above 103, its highest in 14 months, aided by the Federal Reserve’s hawkish stance.
The bullion continues to lose ground on Wednesday, declining near seven-month lows amid rising expectations of a Fed rate hike, which overshadowed progress of an interim US-Iran peace agreement.
The global market is pricing in a US interest rate hike, which is affecting investor sentiment and prompting portfolio adjustments to reflect the outlook and market expectations.
Gold is trading at $ 4,062 per ounce.
Oil prices extended losses from the previous session as the gradual reopening of the Strait of Hormuz eased fears of supply disruption, with tankers now transiting the waterway with satellite signals switched on. Brent crude oil is trading lower at $76.54/barrel.
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