Market News

JOHANNESBURG, June 19 (Reuters) – The South African rand weakened in early trade on Friday, pressured by a firmer dollar and hawkish signals from the U.S. Federal Reserve that dampened appetite for riskier assets.

• At 0613 GMT the rand traded at 16.50 against the dollar, about 0.3% down from its previous close.
• The currency came under pressure as investors reassessed expectations for U.S. interest rates, with Fed officials signalling that borrowing costs may need to remain elevated for longer to curb inflation.
• The greenback strengthened against a basket of currencies, rising to a one-year high.
• Analysts have said that the USD’s advance reflects a sharp repricing of US rate risk rather than safe-haven demand.
• “Upside surprises in payrolls and persistently low layoffs reinforced the view that the US economy can tolerate tighter policy, while cheaper Brent crude failed to offset higher short-term US yields. For South Africans, this keeps USD liquidity expensive and caps ZAR rallies,” said ETM Analytics in a note.
• South Africa’s benchmark 2035 government bond was also weaker in early deals, as the yield rose 5 basis points to 8.32%.