The rand dipped to a fresh six-month low on Wednesday morning, signalling that investors expect the US Federal Reserve to increase interest rates faster than expected. This had the dollar riding roughshod over other currencies, pushing the rand to lows of nearly R13.40/$, its weakest point since mid-December 2017. The weaker rand fuels inflation but is a boon to exporters. The strong dollar followed a pick-up in US inflation figures for May, backing a case for more rate increases. The US Fed is widely expected to increase rates by 25 basis points when it concludes its policy meeting on Wednesday night. "Given the jump in the May inflation print, the question now is whether the Fed will pencil in a December hike or not. If they do, expect the US dollar to surge and emerging markets to be smacked," said Rand Merchant Bank analysts Isaah Mhlanga and Elena Ilkova. US inflation accelerated to an annual rate of 2.8% in May, its highest since early 2012, from 2.5% in April. The Fed has a t...
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