South Africa’s rand fell on Monday as the safe-haven dollar rose, supported by fears of a global economic slowdown and bets on steep interest rate hikes by the U.S. Federal Reserve.
At 17:42, the rand traded at 16.0650 against the dollar, down 1.23% from its previous close.
The dollar index, which measures the greenback against a basket of six major peers, rose around 0.5% to a fresh four-week high against a basket of currencies.
Investec economist Annabel Bishop said in a research note that U.S. May inflation data released on Friday showed the peak did not occur as markets hoped for in April, raising investors’ risk aversion levels.
Bishop added that global financial market fears of low growth and rising inflation have reinforced stagflation concerns.
On the stock market, the Top-40 index was down 2.08% while the broader all-share .JALSH dropped 2.1% as inflation worries triggered a global selloff.
A market gauge measuring the gap between U.S. two-year Treasury yields and 10-year borrowing costs inverted on Monday for the first time since April, a phenomenon that often heralds economic recession.
The government’s benchmark 2030 bond was lower, with the yield up 0.5 basis points to 10.450%.