Rand dragged lower by strong dollar

The rand was pushed lower by a strong dollar early on Monday, as investors sought safety amid uncertainty over the global growth outlook.

At 0650 GMT, the rand traded at 15.6650 against the US currency, 0.3% weaker than its Friday close and at its weakest in around three months.

Other emerging market currencies were also under pressure on fears about whether the global economy can withstand an increasingly hawkish US Federal Reserve, worries about Chinese growth due to Covid-19 lockdowns, and the commodity shock caused by the Russia-Ukraine war.

The rand was pummelled last week, losing more than 6%, with concerns about the South African economy heightened amid severe power cuts by struggling state utility Eskom, and devastating floods which caused more than 10 billion rand of damage to infrastructure in the KwaZulu-Natal province.

Analysts say it could take a few days for the rand to settle after such a steep loss last week. Further out, commodities prices and policy signals from the South African central bank could re-emerge as pillars of support.

The government’s benchmark 2030 bond2030= was slightly weaker in early deals, with the yield rising 1 basis point to 9.865%.