The rand pared the session’s losses on Thursday, having fallen the most in almost two months, while the JSE closed weaker with the local focus on the election outcome.
The local currency weakened more than 1.8% in intraday trading — the biggest one-day loss since April 10 — as both local and global factors weighed on the currency.
“The rand remains under pressure after Wednesday’s national election. Though still in the early stages of counting, the ruling party is likely to lose its parliamentary majority,” said RMB head of forex execution Matete Thulare.
TreasuryONE currency strategist Andre Cilliers said earlier the weakness in the rand was largely due to a stronger dollar amid US inflation nerves returning, weighing on emerging-market currencies generally.
“The final election results are only expected by the weekend and we could see some volatility in the rand depending on the outcome, but markets remain nervous,” Cilliers said.
At 5.20pm, the rand had weakened 1.13% to R18.5945/$, having touched an intraday low of R18.7654/$. It weakened 1.15% to R20.1562/€ and 0.89% to R23.6513/£. The euro was 0.4% firmer at $1.0844.
The SA Reserve Bank’s monetary policy committee (MPC) kept the repo rate steady at 8.25%, as widely expected, but warned about sticky inflation being a hindrance to cuts as the committee remained concerned that inflation expectations are elevated.
“The latest MPC statement was again surprise-free. As expected, borrowing costs will remain higher for consumers and businesses for longer,” said North-West University Business School economist Raymond Parsons.
“It is unlikely that interest rates will be cut until much later in 2024, depending also on a reduction in inflationary expectations as well as the timing of any interest rate cuts by the US Federal Reserve,” added Parsons.
Globally, investors were cautious about the upcoming US personal consumption expenditure (PCE) price index indicator on Friday.
“With Fed officials still pushing the hawkish higher for-longer line for US rates and the need for patience before the Fed acts, markets are concerned that a higher PCE print could push the Fed’s rate cut move to next year,” Cilliers said.
The JSE all share lost 1.8% to 77,161 points and the top 40 1.73%.
At 5.35pm, the Dow Jones industrial average was 1.01% weaker at 38,055 points, while markets were mostly firmer in Europe.
Gold fell 2.13% to $2,343.04/oz and platinum 0.18% to $1,043.92/oz. Brent crude was 1.19% weaker at $82.61 a barrel.
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