Rand Report: Rand faces volatility amid global tensions and US Dollar gains

The South African rand began the week at R17.07 against the US dollar, reaching a 20-month high after a period of steady gains. As expected, the rand saw some losses due to global influences, particularly from the US and Middle East. On Monday, the rand briefly strengthened to R17.03, benefiting from improved investor sentiment towards emerging market currencies and positive domestic data showing private sector credit growth in August. However, this was short-lived as the rand fell 45 cents over the next two days, closing at R17.38 by Tuesday.

The dollar gained strength following a speech by US Federal Reserve Chair Jerome Powell, who adopted a more doveish tone on future interest rate cuts, signalling that only smaller, 25-basis point cuts are likely moving forward after the back of their 50-basis point cut the week before. The strength of the US economy was further supported by ISM manufacturing PMI, remaining the same as the previous month, after dropping over the six months before that. The rand’s decline continued on Thursday due to rising tensions in the Middle East, which led investors to seek safer assets like the Dollar. By Thursday’s close, the rand had weakened further to R17.49.

As the week came to a close, the rand regained some ground, ending Monday at R17.35, with market attention now focused on US inflation data and upcoming Federal Reserve announcements, signalling potential volatility ahead.

Upcoming market events

Wednesday, 9 October

• USD – FOMC minutes

Thursday, 10 October

• USD – Inflation rate
• USD – CPI

Friday, 11 October

• GBP – GDP rate
• USD – PPI
• USD – Michigan consumer sentiment

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