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The rand weakened to R15.85/$ yesterday morning, as the US dollar rallied. As recently as last month, the rand traded at R14.70/$.
The US currency extended gains as investors bet on a quicker pace of monetary tightening by the Federal Reserve after Jerome Powell was nominated to serve a second term as boss and said his goal was to tame the recent spike in inflation.
While Powell was widely expected to get the nod from Joe Biden to continue to head the central bank, the news saw all three main Wall Street indexes drop from intra-day highs, with the Nasdaq ending down more than one percent owing to tech firms’ susceptibility to higher interest rates.
Surging prices – caused by a pick-up in demand, high energy costs and supply issues among other things – have forced several countries to lift borrowing costs and move away from the ultra-easy measures put in place at the start of the pandemic.
The Fed has yet to move, instead just this month starting to taper its bond-buying programme, but expectations are for it to raise rates from the middle of next year, with some observers predicting another two before 2023. – fin24
Online Reporter