The rand took a beating for a second day as the release of the latest minutes by the US central bank’s federal open market committee indicated members remained concerned about inflation.
The Federal Reserve has turned up its hawkish rhetoric over the past couple of weeks, with some of its representatives even talking about the possibility of further rate hikes, while markets have been almost certain the bank’s next move would be to cut.
At the beginning of the year, markets were pricing in total cuts of 150 basis points by year-end. It now seems there may be no cuts at all in 2024.
“The lack of significant progress on inflation returning to the 2% target in the US was a dominant theme in the minutes, and has halted the rand’s recent progress towards R18/$, with it weakening today instead,” Investec chief economist Annabel Bishop said.
“In particular, markets read the minutes as underlying a delay in the start of the rate cut cycle, instead of supporting one,” she said.
At 7.20pm the rand had weakened 1% to R18.4593/$, 0.97% to R19.9806/€ and 1.07% to R23.4589/£. The euro was flat at $1.0824.
Inflation in SA has also been sticky, with only mild decelerations recorded over the past few months. With interest rates at 14-year highs consumers are bearing the brunt of a double whammy, which has seen an increase in those battling to pay off debt.
The JSE fell for a third day running as miners continued to take their toll as a result of softening commodity prices.
Both the all share and the top 40 ended Thursday 0.67% lower, with the all share closing at 78,956 points.
Amid the gloom UK property group Capital & Regional saw its share price leap almost 20% to R14.39 after local firm Vukile expressed an interest in a buyout.
Property major Growthpoint, which owns 68% of Capital & Regional confirmed the offer, with its share price up 2.58% to R11.15.
Biggest loser on the day was Tsogo Gaming, which saw its share price fall the most in nearly three months, down 5.33% to R11.36, after the release earlier of annual results which underwhelmed. It reported income growth of just 2% over the previous year.
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