The rand weakened in early trade on Thursday, giving up some earlier gains after US treasury yields slipped from 16-year highs.
At 9.28am, the rand traded at R19.42/US$, about 0.4% weaker than its previous close. The dollar last traded around 0.04% stronger against a basket of global currencies.
On Thursday, a plunge in oil prices and softer US labour data helped pull treasury yields off 16-year peaks, weakening the dollar and giving some reprieve to emerging market currencies such as the rand in earlier trade.
The rand has already lost about 2.2% against the greenback this month. It’s still not at its worst-ever level against the dollar, although it is close — the record low was set in May, when it sagged to R19.85 to the greenback.
Rand cues
Like other risk-sensitive currencies, the rand often takes cues from international factors like changes in US yields, in the absence of major local data points.
Meanwhile, Reserve Bank governor Lesetja Kganyago said on Thursday that the rand was caught up in a realignment of global currencies that was outside of the bank’s control.
Kganyago told a webinar that his main worry was inflation and the bank was concerned about the exchange rate to the extent that it feeds through into price pressures.
South Africa’s consumer inflation edged up to 4.8% year on year in August from 4.7% in July, but it still remains comfortably within the central bank’s target range of between 3-6%.
Kganyago reiterated on Thursday that risks to the inflation outlook included food prices, oil prices and exchange-rate moves. — Tannur Anders and Kopano Gumbi, (c) 2023 Reuters