Rand strengthens after talk of US interest rate cut
The rand strengthened yesterday after the chairman of the Federal Reserve set the stage for a US interest rate cut later this month, weakening the dollar and boosting risk appetite worldwide.
At 5pm, the rand bid at R13.9406 to the dollar, up 0.3 percent from its previous close.
The yield on South Africa’s benchmark 2026 government bond dropped 7 basis points to 8.04 percent, reflecting higher bond prices.
Fed chairperson Jerome Powell said on Wednesday the Fed would “act as appropriate” to ensure the world’s biggest economy will be able to sustain a decade-long expansion.
Lower interest rates in the US typically lift demand for higher-yielding assets in emerging markets. But economists also expect the SA Reserve Bank to cut its main lending rate at a monetary policy meeting next week, a Reuters poll showed on Thursday.
Data yesterday showed that domestic manufacturing output grew only slightly in May, while the slump in mining continued, albeit more moderately, shifting attention back onto the central bank to stimulate growth.
Stocks enjoyed an early rally after positive retail data and comments from Powell, but closed lower. The JSE Top40 index dropped 0.59 percent to 51188.17 points while the all share index declined 0.56 percent to 57273.14 points.
Reuters
Source: iol.co.za
