South African rand weakens as higher oil weighs, Fed meeting looms
- the rand traded at 16.2350 against the dollar , about 0.6% down from its previous close
JOHANNESBURG: The South African rand edged lower in early trading on Monday as renewed supply disruptions in the Middle East pushed oil prices higher, adding pressure on the currency, while investors looked ahead to the US Federal Reserve’s policy meeting later this week for clues on the interest rate outlook.
At 0815 GMT the rand traded at 16.2350 against the dollar , about 0.6% down from its previous close.
Oil prices rose about 3% on Monday, as attacks on Saudi infrastructure and Gulf shipping deepened supply concerns.
This has weighed on the South African currency, as the country is a net importer of oil and therefore vulnerable to rising crude prices.
Gold , South Africa’s key export, was also down 0.6% at $4,321.26 per ounce by 0724 GMT.
Investors are closely watching Wednesday’s Federal Reserve decision for clues on the interest rate outlook and whether pressure on the rand could intensify.
“The more important signal on Wednesday won’t be the probability of a 25 basis points hike, it’ll be the guidance that follows, and whether Chair Kevin Warsh can convince markets the Fed is still serious about fighting inflation even as oil drags it higher,” said ETM Analytics.
On the Johannesburg Stock Exchange, the Top-40 index was last down 1.2% in early trade.
South Africa’s benchmark 2035 government bond was slightly weaker in early deals, as the yield rose 5 basis points to 8.785%.