JOHANNESBURG: South Africa’s rand weakened in early trade on Tuesday, as the US dollar traded higher ahead of the Federal Reserve’s monetary policy decision due on Wednesday.
At 0625 GMT, the rand traded at 19.0200 against the dollar , about 0.4% weaker than its previous close.
The dollar was last trading up about 0.18% against a basket of global currencies. Recent US economic data has pointed to stubbornly high inflation, causing investors to temper their expectations of the pace and scale of Federal Reserve rate cuts this year.
“As the Fed fund futures data adjusts and drags US bond yields higher, it follows that most currency markets will rock onto the back foot versus the USD,” ETM Analytics said in a research note, adding that the rand was no exception.
South African rand slips ahead of CPI, central bank meetings
Like most emerging market currencies, the rand often takes its cues from global factors such as US monetary policy. In South Africa, the focus this week will be on February inflation figures due Wednesday.
Economists polled by Reuters have predicted that annual inflation will inch up to 5.5%, from 5.3% in January. South Africa’s benchmark 2030 government bond was weaker in early deals, with the yield up 4 basis points to 10.535%.
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