JOHANNESBURG: The South African rand opened weaker on Thursday after Federal Reserve Chair Jerome Powell primed investors for US interest rate hikes, causing the dollar to leap.
At 0610 GMT, the rand traded at 15.4300 against the dollar, 0.6% weaker than its previous close.
Overnight the Fed left its policy rate unchanged, but Powell said the central bank was "of a mind to raise the federal funds rate at the March meeting". Subsequent rate increases and an eventual reduction in the Fed's asset holdings would follow as needed, he added.
The dollar hit multi-week highs on Thursday in the wake of those comments, trading up 0.7% against a basket of currencies.
South African rand slightly firmer as markets await Fed decision
The rand might get some relief later in the session, when the South African Reserve Bank is expected to raise rates at its first monetary policy meeting of 2022.
Its repo rate decision is due at a press conference starting at 1300 GMT, with economists polled by Reuters predicting a 25-basis-point increase to 4.00%.
Around 0930 GMT, the statistics agency will publish the producer price index, shedding further light on inflationary pressures in the economy.
The government's benchmark 2030 bond dropped in early deals on Thursday, with the yield up 8.5 basis points at 9.435%.
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