The rand softens as oil prices rise, Fed in focus
At 06:52 GMT, the rand traded at R16.68 against the dollar, down 0.2% from its previous close
The South African rand faced downward pressure on Wednesday as rising oil prices sparked inflation concerns, while investors awaited the U.S. Federal Reserve's policy decision later in the day for insights into interest rate expectations. At 06:52 GMT, the currency was trading at R16.68 per dollar, a 0.2% decline from its prior close. Oil prices surged by more than 1% on Wednesday following an attack on a Saudi refinery, reigniting worries about supply disruptions from the key exporter.
Markets are now focusing on the Federal Reserve's policy decision at 18:00 GMT, as well as Thursday's release of Personal Consumption Expenditures, a significant inflation indicator closely monitored by the central bank. Traders anticipate the Fed to maintain rates steady on Wednesday, though there is an 84% probability of a December rate hike, according to the CME's FedWatch Tool.
ETM Analytics predicts the rand could depreciate further below the R17.00 mark if persistent rising oil prices and Fed-related headwinds persist. In the absence of domestic data, the rand, like other emerging market currencies, typically mirrors global factors, encompassing U.S. economic releases and geopolitical events.
On the Johannesburg Stock Exchange, the Top-40 index slipped about 0.2% in early trade. South Africa's benchmark 2035 government bond weakened early in the session with yields rising 2 basis points to 8.6%.
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