Rand remains under pressure

The rand slumped to almost R16.84/$ early on Thursday morning – its weakest level since October 2020.By mid-morning, it was trading at R16.78 to the dollar, at R20.09 to the pound and at R17.13 to the euro.Investors are weighing the risks of a US recession with the Federal Reserve hiking rates aggressively. Minutes of June&#039;s Fed meeting released on Wednesday - when policy makers tightened by 75 basis points, the most since 1994 - revealed their concern that worsening inflation would erase faith in the Fed&#039;s ability to control it.The minutes revealed exactly what markets had been fearing and what has caused the massive sell-off in markets over the last two days, says André Cilliers, Currency Strategist at TreasuryONE."The Fed will continue to take a hard-line stance against high inflation, and a 75bps rate hike would &#039;likely be appropriate&#039; at this month&#039;s meeting, even if this might push the US into a recession."Some lacklustre economic data has raised speculation that tighter conditions were already producing an effect, but data overnight showed US job openings fell less than expected in May, pointing to a still tight labour market that could keep the Fed on the offensive.The next major US economic release will be Friday&#039;s jobs report for June. Economists polled by Reuters expect employers to have added 268 000 non-farm payrolls during the month. The dollar index - which measures the currency against six counterparts - slipped 0.22% to 106.82, pulling away from the overnight peak at 107.27, a level not seen since late 2002.Risk-based assets like the rand continue to bear the brunt of dollar strength and the market’s recession fears, says Bianca Botes, director at Citadel Global. - Fin24

Rand remains under pressure

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Rand remains under pressure

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