The rand weakened for a fourth consecutive day with analysts expecting the Reserve Bank to begin cutting interest rates at its next monetary policy committee (MPC) meeting in September.
The result of that meeting is scheduled to be announced on September 19, just one day after the US Federal Reserve will make a call on rates there.
Market bets are now at 100% that the Fed will cut rates in September as the US nears its inflation target of 2%, while the Fed walks a tight line between high rates and slowing economic growth.
“SA saw the strengthening momentum of the rand disrupted last week following communication from the MPC highlighting the increased chance of lower inflation, and so a sooner interest rate cut,” said Investec chief economist Annabel Bishop in a note on Monday.
Bishop said the rand had weakened during 2022 and 2023 as the US hiked interest rates faster than expected as it battled rampant inflation after economic activity picked up following the Covid-19 pandemic. She said markets were also concerned over the possibility of a second Donald Trump presidency after incumbent Joe Biden pulled out of the race on Sunday.
“Markets worry a Trump presidency will see increased trade restrictions, and so weaker global GDP growth, negatively affecting SA.”
At 5.55pm the rand had weakened 0.05% to R18.2698/$, 0.04% to R19.8801/€ and 0.06% to R23.5809/£. The euro was marginally firmer at $1.0882.
The rand reached an intraday worst level of R18.3263/$ before recovering a little in evening trade.
The JSE tracked firmer European markets on the day, with the all share index up 0.71% and the top 40 0.75%.
Leading the gains on the local bourse was Sasol, which rose the most in five weeks, up 6.57% to R145.40. The move came after the company earlier reported a 5% annual increase in coal exports.
Mr Price gained 2.8% to R208.99 after it said sales for the 13 weeks to end-June grew 4.6% to R8.5bn.
At 6.10pm the Dow Jones industrial average was marginally firmer at 40,310 points, while the UK’s FTSE had gained 0.53%, Germany’s DAX 30 1.35% and France’s CAC 40 1.16%.
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