The rand firmed early yesterday but remained close to five-week lows with global financial markets nervous as energy prices surge and concerns mount about the growth outlook in China.
At 8.38am, the rand traded at 15.0600 against the dollar, 0.21 percent firmer than its previous close.
The currency slipped to 15.1673 on Tuesday, its weakest since August 24, as rising US Treasury yields, which supported the dollar, and more evidence of slowing growth in China amid a power shortage dented risk appetite.
Commerzbank FX and EM analyst You-Na Park-Heger wrote in a note that rising energy costs were likely to exert pressure on many emerging market currencies, including the rand, adding:
“As long as the energy prices and thus inflation risks are rising and the South African Reserve Bank is not sending out any more hawkish signals, the rand is likely to remain under pressure in what is a rather EM-negative environment anyway.”
The South African Reserve Bank kept its main lending rate unchanged at a record low of 3.5 percent last week, saying an economic bounce-back from the Covid-19 pandemic was mostly done.
The domestic focus this week is on economic data releases including August credit numbers, producer price inflation and trade figures, all due today.
In fixed income, the yield on the 2030 government bond was flat at 9.305% in early deals.
REUTERS