JOHANNESBURG: The South African rand softened in early trade on Thursday, after a recovery rally in the past two sessions when the dollar weakened.
At 0641 GMT the rand traded at 17.56 against the dollar, about 0.3% weaker than Wednesday’s close.
The local currency has gained more than 1% in the last two days, boosted by weaker dollar after the world’s largest economy reported tame inflation data, raising investor expectations of an interest rate cut by the U.S. Federal Reserve in September.
“Had it not been for the wave of USD selling due to the shifting expectations towards more rate cuts, the ZAR would not have performed as it has,” said ETM Analytics in a research note.
“Bitcoin has surged to fresh record levels, stock markets have enjoyed the shift in sentiment, and commodity prices have maintained their buoyant levels. This is good news for the ZAR and has helped the local currency appreciate against a weakening USD,” said the note.
With no major local data releases left this week, the rand is expected to take its cue from global drivers.
South Africa’s benchmark 2035 government bond was flat in early deals, with the yield down half a basis point to 9.605%.
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