Rand dips after upbeat Fed, land reform worries

The rand weakened early on Thursday, giving back the previous day’s gains amid concern about the government’s land reforms, an upbeat tone struck by the United States central and ongoing trade tensions weighing.

At 0650 GMT the rand was 0.25% weaker at 13.26 to the dollar after closing at 13.23 overnight in New York.

The currency eased around 2% on Tuesday night after President Cyril Ramaphosa said the African National Congress would push ahead with plans to amend the constitution to allow for the expropriation of land without compensation.

But it regained its footing late on Wednesday before the Federal Reserve’s policy decision as traders took up short positions to hedge against an emerging market backlash.

While the Fed kept interest rates unchanged as expected, its tone on the economy was upbeat, signalling it was on track to raise borrowing costs in September and probably again in December, strengthening the dollar.

Washington’s decision on Wednesday to propose a higher 25% tariff on $200 billion worth of Chinese imports also weakened risk demand, scuttling any bull plays for the rand before a jobs report in the US.

Bonds opened flat with the yield on the benchmark bond due in 2026 unchanged at 8.595%.

Stocks were set to open lower at 0700 GMT, with the JSE securities exchange’s Top 40 Futures Index down 1.15%.