Rand weaker as Fed rate bets support dollar

The rand was weaker in early trade on Friday, as rising expectations that the US Federal Reserve will raise interest rates by 25 basis points (bps) in May lent support to the dollar.

At 08:56, the rand traded at R18.09 against the dollar.

The dollar was marginally firmer against a basket of global currencies, with money markets now pricing in a roughly 86% chance of 25 bps hike next month despite jobless claims this week pointing to a slowing labour market.

The risk-sensitive rand often takes its cue from global factors like the outlook for US monetary policy in the absence of major local drivers.

No major domestic economic data is due to be released on Friday, although weekly inflation-linked bond and Treasury bill auctions are scheduled.

Next week Statistics South Africa will publish the March producer price index, and the central bank will release its February leading business cycle indicator and biannual Monetary Policy Review.

The government’s benchmark 2030 bond was little changed in early deals, with the yield up 1 basis point at 10.080%.