Market News
South African rand weaker following Fed meeting minutes - REUTERS
JOHANNESBURG, May 23 (Reuters) - The South African rand weakened on Thursday, after Federal Reserve meeting minutes released on Wednesday hinted that interest rates will remain higher for longer in the world's biggest economy.
At 1502 GMT, the rand traded at 18.4450 against the dollar , 0.85% weaker than its previous close.
The dollar last traded around 0.02% firmer against a basket of global currencies. "After a stellar month, the ZAR has finally experienced some profit-taking," Danny Greeff, co-head of Africa at ETM Analytics, told Reuters.
"The catalyst for this ... was the hawkish tone in the Fed's May meeting minutes, which pointed to a higher-for-longer rates outlook in the US," Greeff added.
On Tuesday, the rand had firmed to levels not seen since August last year, before the Fed's minutes on Wednesday after South African markets closed.
Like other emerging market currencies, the risk-sensitive rand often takes cues from global drivers like U.S. monetary policy in addition to local data points.
Risks around the local currency remain ahead of a general election on May 29, which could see the governing African National Congress lose its parliamentary majority for the first time in 30 years and force the party into a coalition government. "While investors have reduced some of their hedges against a potential ZAR blowout post the elections... uncertainty will likely keep the ZAR undervalued in the lead up to the elections," Greeff added.
On the stock market, the Top-40 index (.JTOPI) closed down about 0.7%. South Africa's benchmark 2030 government bond was weaker, with the yield up 14 basis points at 10.430%.
