South African Rand Weakens as Dollar Gains, Precious Metals Slide
South African Rand (ZAR) weakened against trading pairs in the forex market on Thursday as global commodity prices fell amid a stronger US dollar.
The local unit depreciated against the greenback, the Euro and the British pound as global inflation concerns fuel a possible interest rate hike in the United States.
The rand weakened to R16.60 per dollar on Thursday, South Africa’s First National Bank (FNB) said in a brief, pressured by a stronger dollar and hawkish Fed expectations.
The Bank said softer precious metal prices have also added pressure, although contained oil prices have helped ease concerns about imported inflation.
Against other crosses, the rand is trading at R22.01 per pound and R18.38 per euro, according to the brief. Gold has dropped to $3978.74 per ounce as a stronger dollar and hawkish Fed signals are pressuring prices.
The hotter-than-expected US inflation print has strengthened expectations for further rate hikes, with markets pricing a 91% chance of a December rate hike. Investors now await jobs, housing, and producer inflation data for further clues on policy.
Brent has slipped to $91.34 per barrel as US-Iran negotiations stall. Despite disruptions to Russian refining capacity, recovering Middle East supply continues to contain prices, with Saudi output jumping 26% in October. Brent remains more than 20% below its October peak.
