JOHANNESBURG: South Africa's rand weakened on Monday along with fellow emerging markets' (EM) currencies as the dollar rallied after the Federal Reserve signalled a rate hike by year-end.
By 0700 GMT the rand slipped 0.32 percent to 11.9310 versus the dollar, which marched to a month-high after positive CPI data and strong indications by U.S. Federal Reserve chair Janet Yellen that the bank would raise rates in 2015.
The news lifted the dollar index, which measures the greenback against major currencies, to its firmest in a month while most EM currencies suffered.
"U.S. Fed Chair Janet Yellen was clearer than ever on Friday that the central bank is poised to raise interest rates this year," analysts at NKC Independent Economists said in a note.
Expectations of higher U.S. interest rates tend to weaken demand for higher-risk assets such as the rand.
Government bonds also weakened, with the yield on the benchmark paper due in 2026 adding 4.5 basis points to 8.095 percent.
Traders said there was scope for the rand to extend losses in a data-filled week, with the moves beyond the 11.95 technical support coming into range.
South Africa's statistics agency releases unemployment and GDP data on Tuesday, followed by producer inflation, budget, trade balance and a fuel price decision later in the week.
Comments
Comments are closed.