South African Rand Weakens as Fed Rate Expectations Drive USD Rally
The South African rand is marginally weaker against the US dollar on Monday as markets price in the US Federal Reserve’s policy outlook.
The rand is trading at R16.25 as a firmer dollar, supported by renewed expectations of further US Federal Reserve rate hikes, weighs on emerging-market currencies, First National Bank (FNB) said in a brief.
The US Federal Reserve’s hawkish stance has been capped by recent weakness in the dollar following softer-than-expected US jobs data last week.
The rand has also softened slightly against the euro and pound, trading at R18.57 per euro and R21.67 per pound, respectively, First National Bank analyst said in the note.
Stability in the Middle East continues to ease pressure on energy markets, with crude oil prices falling to pre-war levels on Monday, as supply risk fizzled after the oil cartel’s decision.
Brent crude is trading slightly lower at $71.87 per barrel after OPEC+ agreed to a fifth consecutive monthly production increase of 188 000 barrels per day for August.
Meanwhile, shipping activity through the Strait of Hormuz improved over the weekend following the US-Iran interim peace agreement, although analysts caution that vessel traffic remains below pre-conflict levels amid ongoing security concerns in the region.
Elsewhere, the gold price has eased to $4 157 per ounce from Friday’s close of $4 177 per ounce as a stronger dollar prompts some profit-taking.
Despite the decline, the precious metal remains underpinned by safe-haven demand and robust physical buying. Investor appetite remains strong, highlighted by China’s Huaan Yifu Gold ETF recently becoming the country’s largest ETF by market capitalisation. DMO Hikes Spot Rates on 7-Year, 10-Year FGN Bonds
