Rand loses further traction against dollar
by Ray Faure,
2016-03-24 16:49:37.0
THE rand lost more than 1% against the dollar on Thursday as the greenback headed for its fifth day of gains, spurred by talk of the possibility of more than one US rate hike this year.
Hawkish comments by several US Federal Reserve members pointed to a rate increase as soon as April.
At 4pm, the rand was trading at R15.5210 to the dollar from R15.3361 at Wednesday’s close. It was at R17.3220 against the euro from R17.1469 previously, and at R21.9100 against the pound from R21.6493 previously.
The euro was at $1.1160 versus the dollar from $1.1180 previously.
Treasury One’s chief currency dealer Wichard Cilliers said the most notable comment came from Fed member James Bullard on Wednesday, who said officials should consider raising rates at the next meeting, which had also prompted investors to rethink their stance that the Fed rate increases were on ice.
Hawkish comments bolstered the allure of dollar-denominated assets and, in turn, helped the greenback to rebound after last week’s weakness, Mr Cilliers said.
Global equities and commodities had taken a knock after the Fed news and, with them, risk currencies like the rand had weakened, he said.
Meanwhile, local inflation came in higher than expected on Wednesday, fuelling expectation of further rate increases later this year as the South African Reserve Bank attempted to bring inflation back into the target band of 3% to 6%, Mr Cilliers said.
Another increase might occur as soon as May if inflation surprised again next month, he added.
"Fed officials have been keeping up the hawkish rhetoric. Some market participants are even wondering if this is a co-ordinated attempt to get the market to price the two hikes that the Fed is predicting. Whatever the case, the tough talk has kept the slow and steady dollar rally intact," RMB Global Markets said in a note.
Picture: GALLO IMAGES/FOTO24/BRENDAN CROFT
THE rand lost more than 1% against the dollar on Thursday as the greenback headed for its fifth day of gains, spurred by talk of the possibility of more than one US rate hike this year.
Hawkish comments by several US Federal Reserve members pointed to a rate increase as soon as April.
At 4pm, the rand was trading at R15.5210 to the dollar from R15.3361 at Wednesday’s close. It was at R17.3220 against the euro from R17.1469 previously, and at R21.9100 against the pound from R21.6493 previously.
The euro was at $1.1160 versus the dollar from $1.1180 previously.
Treasury One’s chief currency dealer Wichard Cilliers said the most notable comment came from Fed member James Bullard on Wednesday, who said officials should consider raising rates at the next meeting, which had also prompted investors to rethink their stance that the Fed rate increases were on ice.
Hawkish comments bolstered the allure of dollar-denominated assets and, in turn, helped the greenback to rebound after last week’s weakness, Mr Cilliers said.
Global equities and commodities had taken a knock after the Fed news and, with them, risk currencies like the rand had weakened, he said.
Meanwhile, local inflation came in higher than expected on Wednesday, fuelling expectation of further rate increases later this year as the South African Reserve Bank attempted to bring inflation back into the target band of 3% to 6%, Mr Cilliers said.
Another increase might occur as soon as May if inflation surprised again next month, he added.
"Fed officials have been keeping up the hawkish rhetoric. Some market participants are even wondering if this is a co-ordinated attempt to get the market to price the two hikes that the Fed is predicting. Whatever the case, the tough talk has kept the slow and steady dollar rally intact," RMB Global Markets said in a note.
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