Rand hovers near 23-month lows as dollar strength weighs

In early trade the rand was at R17.19 against the dollar, up marginally from its previous close, but not far from the Thursday low of R17.30, a level unseen since August 2020.
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The rand hovered near 23-month lows in early trade on Friday, as the dollar briefly paused its ascendancy after two Federal Reserve policymakers said they favoured a smaller rate rise to fight soaring inflation.

At 0638 GMT, the rand traded at R17.19 against the dollar, up marginally from its previous close, but not far from the Thursday low of R17.30, a level unseen since August 2020.

Traders had ramped up bets that the Fed would go for a full percentage point at their July 26-27 meeting after hotter-than-expected US inflation data on Wednesday.

But those bets were pared after Fed Governor Christopher Waller and St. Louis Fed President James Bullard both said they favoured another 75 basis-point hike for this month, in spite of the inflation figures.

The dollar index, which measures the US currency against six rivals, last edged up to 108.68. It had climbed to 109.29 a day earlier, its highest since September 2002.

The dollar strength has come at the expense of riskier assets such as the rand, underpinned by fears of a global recession, driving investors towards safe-haven assets.

The local currency is also dependent on the performance of the mining sector, which saw a 7.8% year-on-year contraction in domestic production in May.

The government’s benchmark 2030 bond was higher in early deals, with the yield down 3.5 basis points to 10.975%.

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