Rand hits weakest level since Lady R saga

Karl Gernetzky - The rand yesterday morning traded at its worst level against the US dollar since early June, with interest in the greenback surging as strong US data fuelled speculation the Federal Reserve will once again need to hike interest rates, and keep them elevated for a sustained period.The rand – and the Namibian dollar - was trading about 0.3% weaker at R19.38/US$ as of 9:15, earlier trading as low as about R19.43. This is its weakest level since early June when South Africa was grappling with concerns stemming from US accusations it was supplying arms to Russia. A panel subsequently found no evidence that arms were loaded onto the Lady R vessel. The JSE All Share was down about 0.6% in early trade, and major US bourses had all close more than 1% lower on Tuesday.By lunchtime, the rand traded at R19.28 against the greenback. The rand was trading about 0.2% weaker at R20.26 to the euro and 0.3% weaker at about R23.40 to the pound.Greenback rallyThe third straight month of US manufacturing improvement reported by the Institute for Supply Management (ISM) strengthened economists&#039; expectations that growth accelerated in the third quarter, Reuters reported on Tuesday. At the same time, the number of job openings at US employers unexpectedly jumped in August, a testament to the resilience of the labour market. The reaction of markets was "sharp and clear," Swissquote Bank senior analyst Ipek Ozkardeskaya said in a note.The US dollar rallied, and US bond yields spiked. "Alas, a catastrophic scenario for the global financial markets where the rising US yields threaten to destroy value everywhere," she said.Markets are now pricing in an over 50% chance of the Fed hiking rates later this year again, according to currency strategist at TreasuryONE Andre Cilliers, and bets that the South African Reserve Bank (SARB) will need to follow suit are on the rise. FuelYesterday&#039;s big petrol price hike in South Africa is also likely to raise inflation fears, he added.The unleaded petrol price (95) was hiked by R1.14 a litre, while 93 increased by R1.08. Diesel (0.05% sulphur) rose by R1.96 a litre, while 0.005% sulphur jumped by R1.96.A litre of 95 unleaded petrol now costs R25.68 in Gauteng, while the wholesale price of diesel in Gauteng is R25.01 a litre, a new high for 2023. In July last year, diesel reached a record high of R25.40.The Automobile Association (AA) recently expressed concern over the escalating prices."These increases are going to hit all consumers hard, and they come at a time when most South Africans are feeling extreme financial pressure," it said. – Fin24

Rand hits weakest level since Lady R saga

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