Picture: FINANCIAL MAIL
Picture: FINANCIAL MAIL

THE rand dropped substantially in late trade on Tuesday after news of renewed conflict between the Hawks and Finance Minister Pravin Gordhan.

The Hawks said the minister had failed to meet the second deadline for answering questions.

At 3.37pm, the rand was at R15.9666 to the dollar from R15.5375 at Monday’s close. It was at R17.7397 against the euro from R17.2471 and at R22.6363 against the pound from R22.2240. The euro was at $1.1111 from $1.1101 previously.

Meanwhile global investors were waiting for guidance from the US Federal Reserve on the course of interest rates in that country. Investors were cautious ahead of a two-day Federal open market committee meeting that was due to begin later on Tuesday, which market participants would be watching closely.

Some analysts think the meeting could signal further US rate increases, which would strengthen the dollar, Dow Jones Newswires reported.

While no change to monetary policy was expected, investors would closely watch the bank’s policy statement and economic projections, as well as chairwoman Janet Yellen’s news conference on Wednesday, the newswire said.

When the Fed raised rates in December, officials projected another four rate increases in 2016. But markets are pricing in a roughly 50% chance of a rate increase in June, and a roughly 75% chance of a rise by December, according to Fed-funds futures.

Markets are also waiting for interest rate decisions by the South African Reserve Bank and the Bank of England, both due on Thursday.