JOHANNESBURG – The rand weakened on Tuesday, eating into strong gains since the start of the year as the dollar recovered following a recent slump.
At 5pm the rand was bid at 13.91 to the greenback, 4c weaker than Monday's 5pm bid. Against the pound the domestic currency was 1c firmer at R17.71 and against the euro it was 1c softer at 15.92.
Similar falls were seen in other emerging market currencies like the Russian rouble and Turkish lira as the dollar index was more than 0.2 percent stronger.
“Appetite for the rand and many other emerging markets has been impacted by a stabilizing dollar,” said Hussein Sayed, chief market strategist at forex broker FXTM.
After a torrid 2018 the rand enjoyed a strong start to this year, helped by dovish comments by US Federal Reserve policymakers which hurt the dollar.
Corporate treasury manager at Peregrine Treasury Solutions, Bianca Botes said the loss of momentum in risk appetite indicated that, while the market was expecting a dovish Fed, investors remained realistic that a rate cut, or anticipation of a future rate cut, was premature and overly optimistic for emerging markets despite the dovish tone.
"Local vehicle sales, European confidence data and US trade balance and Job Opening figures will all weigh in today, making for a bumpy ride," said Botes.
Despite Tuesday’s decline, the rand is still up more than 2 percent against the dollar in 2019.
On the bourse, the benchmark JSE Top40 index ended 0.5 percent higher at 46 116 while the broader all share index gained 0.6 percent to 52 165.
Additional reporting by Sizwe Dlamini.
REUTERS/BUSINESS REPORT ONLINE