The rand ended the week on the front foot, firming on Friday as a weaker US dollar gave emerging-market currencies room to breathe. Softer-than-expected American jobs data cooled expectations of a near-term interest-rate hike from the Federal Reserve, dragging the greenback lower against a basket of currencies and lifting the local unit.
Where the market stood
By 1415 GMT the rand was trading at around 16.23 to the dollar, up about 0.3% on its previous close. On the Johannesburg Stock Exchange, the blue-chip Top-40 index rose 1.1%, while South Africa’s benchmark 2035 government bond strengthened, its yield easing 4.5 basis points to 8.22%.
Global cues in the driving seat
“The rand strengthened modestly this week, supported primarily by a weaker US dollar after softer-than-expected US jobs data shifted the expected timing of the Fed’s interest rate hike towards the end of the year,” economists at Nedbank said in a note. Like other emerging-market currencies, the rand continues to take much of its direction from global forces — US data and geopolitics chief among them — rather than domestic developments.
At home, the picture was mixed. An S&P Global survey showed the private sector returning to marginal growth in June as price pressures eased, though a separate manufacturing gauge released earlier in the week pointed to deteriorating factory sentiment, with lower oil prices offering some comfort about the months ahead. Attention now turns to the Reserve Bank’s rate decision on 23 July, which could set the tone for the currency into the second half of the year.
