adminThe rand weakened in early trade on Thursday, after the US Federal Reserve signalled that it will not slow down the pace of its interest rate increases.
At 9am, the rand traded at R18,29 against the dollar, 0,11 percent weaker than its previous close.
The Fed raised interest rates by 75 basis points on Wednesday and said its battle against inflation would require borrowing costs to rise further.
Fed Chair Jerome Powell, speaking at a news conference at the end of a policy meeting, said it was “very premature” to discuss when the Fed might pause its rate increases, sending jitters through the markets.
“The Fed’s hike of 75 bp might have been priced in, but the risk of many more hikes wasn’t. Risk aversion is up, and higher beta currencies will experience higher volatility,” ETM Analytics said in a research note.
The dollar index, which measures the US currency against six major peers, was trading flat at 112.14.
Emerging market currencies such as the risk-sensitive rand are highly susceptible to global drivers like US monetary policy.
On the South African stock market, the Top-40 index was down 1,37 percent while the broader all-share index traded 1,28 percent lower in early trade.
The government’s benchmark 2030 bond was lower in early deals, with the yield up 6 basis points to 10,780 percent. – Reuters
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