Rand falls as Fed chair’s comments boost dollar

The rand slid in early trade on Thursday, hurt by dollar strength linked to Federal Reserve Chair Jerome Powell pushing back on the idea of a US interest rate cut as soon as March.

At 0725 GMT, the rand traded at R18.77 to the dollar.

The dollar was up about 0.2% against a basket of global currencies, adding to Wednesday’s gain when Powell made the comments after Fed officials left rates unchanged but dropped a longstanding reference to possible further hikes in borrowing costs.

The rand is highly sensitive to shifts in the outlook for US interest rates and global risk appetite.

Local economic data releases on Thursday include a purchasing managers’ index survey for the manufacturing sector and vehicle sales figures.

The Johannesburg Stock Exchange’s Top 40 index was down 1.2%. The benchmark 2030 government bond also fell, the yield rising 4 basis points to 9.79%.