South Africa's rand gained more than 1 percent to the dollar on Tuesday as weaker-than-expected US retail sales data dampened expectations the Federal Reserve could raise interest rates as early as June. The rand was stronger despite South Africa's power utility Eskom having lost a quarter of its usual power supply in plant breakdowns.
"If it were not for some structural domestic hindrances such as Eskom and electricity supply shortages we possibly would have seen an even stronger reaction on the rand," said Jana van Deventer, a market analyst with ETM Analytics.
The rand climbed to a session high of 11.9530 to the greenback, and was trading 1.2 percent stronger at 11.9900 by 1529 GMT, compared with its closing level on Monday. The dollar fell after March US retail sales data, while the strongest in a year, came in below expectations, triggering a sell-off that pulled it down from the prior week's strong gains.
"The data ... has provided support to emerging market currencies across the board as investors reconsider prospects for the Fed to raise interest rates as early as June," van Deventer said.
South African government debt also climbed higher, with the yield for the 2026 benchmark falling 7.5 basis points to 7.725 percent.
Comments
Comments are closed.