Rand Slips as Dollar Strengthens on Hawkish Fed Signals
By Aboki Forex —
The South African rand fell in early trade on Wednesday, dropping about 0.3% to 16.60 against the dollar. A firmer greenback and hawkish comments from the US Federal Reserve dampened demand for riskier assets.
The dollar index climbed to its strongest level in 13 months. Investors are pricing in possible US interest rate hikes and moving away from technology stocks. This shift has put pressure on emerging market currencies like the rand.
“Geopolitical risks are on the back burner for now, with markets reverting to economic fundamentals as drivers for the dollar,” said Andre Cilliers, currency strategist at TreasuryONE.
The rand often follows global trends as a risk-sensitive currency. On the Johannesburg Stock Exchange, the Top-40 index edged up 0.1% in early trade. South Africa’s benchmark 2035 government bond weakened slightly, with the yield rising 2.5 basis points to 8.36%.