JOHANNESBURG - The Rand recovered from five-month lows against the dollar in late trade yesterday as the greenback paused its recent rally triggered by hawkish rhetoric by the US Federal Reserve.
At 5pm, the rand was bid at R13.5316 to the dollar, 0.42percent firmer than its New York close on Wednesday.
The currency had hit R13.71 earlier in the session, its weakest level since May9, as it extended losses from previous sessions after comments by US Federal chairperson Janet Yellen on Tuesday emphasised the need to continue with rate hikes. The rand’s recovery came as data showed domestic producer price inflation quickened more than expected in August, but remained below the central bank’s upper inflation target range of 3percent to 6percent.
But despite inflation being anchored within the central bank’s range, analysts expect a volatile rand and political risks to keep the SA Reserve Bank from cutting interest rates again this year. “The outlooks for both producer and consumer inflation are still favourable with both expected to be below the Reserve Bank’s upper target range for the remainder of the year,” Nedbank analysts said in a note.
“However, rand volatility ahead of the (ANC) elective conference in December will reduce the chances of an early reduction.” In the equity market, the all share index weakened 0.4percent to 54994.35 points, while the Top40 index fell 0.36percent to 48842.89 points. The mining index was down 1.11percent while the platinum index and gold index were 1.48percent and 0.21percent lower, respectively.