South African rand pauses after Friday surge on Powell speech

JOHANNESBURG: The South African rand was flat early on Monday, pausing after a strong move higher on Friday when US Federal Reserve Chair Jerome Powell laid out a slower-than-expected path to interest rate hikes.

At 0650 GMT, the rand traded at 14.7300 against the dollar, little changed from its previous close of 14.7325.

Powell said in a speech at a US central banking conference that tapering of asset purchases could begin this year but that it would not directly signal higher rates, as hiking would need the economy to pass a substantially more stringent test.

The rand is highly sensitive to changes in risk appetite on global markets and expectations of the pace of US monetary policy normalisation.

This week, South Africa-focused investors will scrutinise budget data, trade figures, credit extension numbers and a PMI survey for clues about the health of Africa's most industrialised economy.

So far the recovery from the COVID-19 pandemic has been uneven and halting, with arson and looting linked to the imprisonment of former president Jacob Zuma detracting from a strong first-quarter performance.

Government bonds were a touch weaker in early deals, with the yield on the 2030 instrument rising 1.5 basis points to 8.83%.