JOHANNESBURG: The South African rand firmed in early trade on Wednesday, as risk sentiment improved and markets awaited jobless claims data out of the United States on Thursday for hints on the future interest rate path of the world’s biggest economy.
At 0626 GMT, the rand traded at 18.41 against the dollar , about 0.45% stronger than its previous close.
The rand is trading firmer “as risk sentiment improves and EM (emerging market) currencies all show some gains,” Andre Cilliers, currency strategist at TreasuryONE, said.
“Tomorrow’s US jobless claims number will now be sharply in focus for confirmation of the weakening US labour market,” Cilliers added.
Friday’s weak US July payrolls report stoked recession worries earlier this week and led to a plunge in global equities on Monday, with traders fleeing to safe havens.
But US central bank policymakers pushed back on Monday against the notion that the economy is close to recession and indicated the Federal Reserve would need to cut rates to avoid such an outcome.
South African rand slips against the dollar
Like other risk-sensitive currencies, the rand often takes its cue from global drivers such as US economic data and monetary policy in addition to local factors.
On the domestic front, South Africa’s net foreign reserves rose to $59.165 billion at the end of July from $58.437 billion in June, central bank data showed on Wednesday.
South Africa’s benchmark 2030 government bond was also firmer in early deals, with the yield down 2.5 basis points to 9.35%.
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