JOHANNESBURG – The rand’s glow following Finance Minister Tito Mboweni's Budget speech faded yesterday as emerging market currencies weakened after markets digested the US Federal Reserve’s January meeting minutes as they turned out to be less dovish than expected.
The local currency, which had strengthened to a day’s high of R13.88 against the dollar, backtracked to R14.01 by 5pm.
André Botha, a senior dealer at TreasuryONE, said the rand could expect to trade in narrow bands as the markets digest news from the Budget.
“The apocalypse that a lot of people foresaw did not materialise and there is a real possibility that we could see the rand stabilising and possibly trading lower as some of the risks that were in the market are subsiding,” Botha said.
“The US Fed minutes only confirmed that the US is taking a back step on the interest rate hiking cycle. We did not see the US dollar weakening after the release of the minutes as the market expected the tone of the minutes to be dovish.”