Rand trades weaker with markets in alert mode over geopolitical tension
The rand was slightly weaker against the dollar and the euro, but extended losses against the pound after the British currency crossed $1.35 for the first time in a year.
While the market is on the alert over the tension created by North Korea’s recent missile launch over Japan, reaction has been controlled, analysts said. A missile launch by North Korea earlier this month saw investors scurrying towards safe-haven assets such as gold, with the price of the metal rallying.
The spot price of gold was, however, down by 0.36% to $1‚325.02 an ounce.
The rand weakness against the pound came on the warning from the Bank of England of possible interest-rate increases in the future, to contain inflation. It has kept interest rates unchanged so far, despite rising consumer inflation in the UK. The rand closed 1.31% weaker against the pound on Thursday.
On Thursday, US headline inflation came in at 1.9% in August on a year-on-year basis from an expected 1.8%, which renewed expectations of an interest-rate increase before the end of the year.
Rand Merchant Bank analyst John Cairns said the effects of yesterday’s US inflation print may not have lasted very long in the currency market, but the figure is vital in understanding the economic backdrop.
At 11.31am‚ the rand was at R13.1890 to the dollar from R13.1166‚ at R15.7555 to the euro from R15.6372, and at R17.8808 to the pound from R17.5787.
The euro was at $1.1945‚ from $1.1918.
The pound was at $1.3556 from $1.3396.