South African rand softens as markets absorb central bank rate hike
JOHANNESBURG: The South African rand softened in early trade on Friday as markets digested the central bank’s interest rate hike, while growing expectations that the Federal Reserve will keep interest rates elevated weighed on the risk-sensitive currency. At 0610 GMT, the rand traded at 16.40 against the dollar , about 0.3% down from its previous close. The South African Reserve Bank raised its…
On Friday, the South African rand weakened in early trade as markets absorbed the central bank's decision to raise interest rates. The Rand was trading at 16.40 against the US dollar, a 0.3% decline from its previous close. The South African Reserve Bank increased its key interest rate by 25 basis points to 7.25%. Governor Lesetja Kganyago stated that the ongoing war in Iran had caused "large and sustained" price shocks, and tighter policy was required to prevent higher inflation from becoming entrenched.
As a major fuel importer, South Africa is highly sensitive to fluctuations in global energy prices. The US dollar, on the other hand, was on track for its first consecutive weekly gains in over three months, driven by surging Treasury yields and expectations of further Federal Reserve rate hikes. Investors will closely monitor a series of economic indicators next week, such as money supply, private sector credit, trade balance, budget balance, producer inflation, and formal sector employment figures.
The South African government bond with a maturity of 2035 held steady, with its yield remaining unchanged at 8.72%.
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