Rand weakens as dollar gains on aggressive Fed rate hike bets

The rand weakened in early trade on Wednesday after the dollar jumped on economic data in the United States that reinforced the view that the Federal Reserve will continue with aggressive interest rate hikes.

At 08:35, the rand traded at R17.33 against the dollar, 0.17% weaker than its previous close.

The dollar index, which measures the currency against six rivals, was last up 0.13% at 110.48.

A report overnight showed the US services industry unexpectedly picked up last month, underpinning the view that the economy is not in recession and giving the Fed leeway for another 75-basis-point rate rise later this month.

Emerging market currencies such as the rand are highly susceptible to global drivers, especially US monetary policy.

The government’s benchmark 2030 bond was little changed in early deals, with the yield up 1 basis points to 10.500%.