Registered users can save articles to their personal articles list. Login here or sign up here

Rand stronger with Fed seen cutting rates

Comments from Fed’s Powell weaken the dollar, boosting risk appetite worldwide.

The rand strengthened on Thursday after the chairman of the Federal Reserve set the stage for a US interest rate cut later this month, weakening the dollar and boosting risk appetite worldwide.

At 0657 GMT, the rand traded at 13.93 versus the dollar, up 0.3% from its previous close.

The yield on South Africa’s benchmark 2026 government bond dropped eight basis points to 8.030%, reflecting higher bond prices.

Fed chair Jerome Powell said on Wednesday the Fed would “act as appropriate” to ensure the world’s biggest economy will be able to sustain a decade-long expansion.

Lower interest rates in the United States typically lift demand for higher-yielding assets in emerging markets like South Africa.

But economists also expect the South African Reserve Bank to cut its main lending rate at a monetary policy meeting next week, a Reuters poll showed on Thursday.

Read: Reserve Bank expected to cut rates on July 18

“Given the potential for rate cuts in South Africa, the benefits the rand may gain from the lower trajectory in US interest rates may not be as telling as at first glance,” Warrick Butler, a senior trader at Standard Bank, wrote to clients.

“There is still the backdrop of a possible (credit rating) downgrade in November to contend with, coupled with the continued malaise at (state power firm) Eskom,” he said.

Get access to Moneyweb's financial intelligence and support quality journalism for only
R63/month or R630/year.
Sign up here, cancel at any time.

COMMENTS   0

To comment, you must be registered and logged in.

LOGIN HERE

Don't have an account?
Sign up for FREE

LATEST CURRENCIES  

USD / ZAR
GBP / ZAR
EUR / ZAR

Podcasts

SHOP NEWSLETTERS TRENDING CPD HUB

Follow us:

Search Articles:Advanced Search
Click a Company:
server: 172.17.0.2