Rand slides as lengthy Fed easing ruled out

South Africa’s rand weakened on Thursday along with other emerging market currencies, a day after the US central bank cut lending rates but ruled out a long rate-cutting campaign.

Stocks closed higher.

At 1505 GMT the rand was 1.45% weaker at 14.54 per dollar, its weakest since June 18.

The US Federal Reserve cut interest rates as expected on Wednesday but chief Jerome Powell said the move might not be the start of a lengthy campaign to shore up the economy against risks, disappointing investors who hoped for a more dovish stance.

The dollar index rose to a two-year high, hurting demand for developing world currencies.

The tame outlook for US rates adds to economic pressures faced by the rand at home after unemployment hit an 11-year high and the fiscal and credit ratings risk posed by power utility Eskom continued to unnerve investors.

“The rand is likely to remain under sustained pressure, with local factors also weighing on it. The focus is now likely to shift to the US NFP data release tomorrow,” traders at Nedbank said in a note.

In equities, the Top-40 index closed 1% higher while the broader all-share was up 0.5%.

Among the gainers were e-commerce giant Naspers, which closed up nearly 4%.

Bonds weakened, with the yield on the benchmark 10-year government issue climbing 5.5 basis points to 8.38%.