Rand eases after rallying to highest since mid-November

The rand lost ground on Friday morning, a day after racing to its highest level since mid-November, highlighting the skittish sentiment that characterised this week’s trading as investors second guessed the extent of potential increases in interest rates by US Federal Reserve. 

The rand lost 0.22% to R15.24/$ in early dealings, having weakening up to R15.55/$ earlier in the week.

The Fed, which meets next week Tuesday and Wednesday to decide policy, is under pressure to fight off inflation, which is its highest since 1982.

The SA currency started the week on a weak note, but gained traction after worse than expected local consumer inflation data raised expectations that the SA Reserve Bank raise rates, possibly as soon as next Thursday when its monetary policy committee wraps up the first sitting of the year.

The rand would have also benefited from this week’s surge in commodity prices, particularly platinum group metals, after China’s central bank lowered mortgage lending benchmark rates to boost the property market.

However, Asian markets were decidedly weaker on Friday, after a negative handover from Wall Street on Thursday, where its main benchmark indices ended in the region of 1%.

The JSE all share could potentially follow suit, though it held up reasonably well in the week, helped by big industrial stocks such as Richemont and Naspers, as well as big miners that benefited from higher metal prices.

However, commodity markets came off the boil on Friday morning, with platinum losing 0.46% to $1,036.18/oz, with palladium easing 1% to $2,042.50/oz. Brent crude lost 0.61% to $86.92 per barrel.

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Source: businesslive.co.za