South Africa’s rand weakened against the dollar on Wednesday as the greenback widened its gains on strong US housing data, adding pressure on emerging market currencies.
By 1507 GMT, the rand was trading 1% weaker at 12.2450 to the US currency from its New York close at 12.1230 on Tuesday, its lowest in six weeks.
“The dollar has been trading fairly stronger on the session, relatively range bound. Data from the US related to home sales came in a bit stronger than consensus expectations,” said Rob Price, market analyst at ETM Analytics.
The strong numbers are another indicator that the US economy is regaining momentum, but previous data on retail sales, housing starts and manufacturing will probably be insufficient to convince the Fed to start raising interest rates in June.
On the local front, power utility Eskom, which is battling its worst outages since 2008, imposed power cuts for a 10th day running on Wednesday and said two large power plants under construction would be delayed even further.
Consumer Price Inflation data showed headline consumer inflation up slightly to 4.0% year-on-year in March from 3.9% in February.
Ion de Vleeschauwer, chief dealer from Bidvest Bank, said the inflation data “was too close to the market expectations to really move the rand in any direction.”
Yields on government bonds were down, with the benchmark paper due in 2026 shedding 0.5 basis points to 8.030%.