Rand weakens with focus on Ukraine crisis

South Africa’s rand traded lower early on Thursday, shedding gains from the previous session, with traders turning cautious that Russia’s invasion of Ukraine could dampen economic growth.

At 0642 GMT, the rand traded at R15.33 against the dollar, around 0.2% weaker than its previous close. The currency had touched R15.28 on Wednesday as strong commodity prices offered support.

“With the war still tentatively poised, I can’t see a reason to be overly bullish risky assets just yet, despite the commodity play,” Warrick Butler, chief trader at Standard Bank, wrote in a note.

“There is still too much uncertainty although at least we now know the cards the Fed is holding in their hands.”

US Federal Reserve Chair Jerome Powell said on Wednesday the central bank would begin “carefully” raising interest rates this month, but was ready to move more aggressively if needed – more or less the scenario traders have priced in.

In fixed income, the yield on the benchmark 2030 government bond was up 2.5 basis points to 9.57%, reflecting weaker prices.