Picture: SUPPLIED
Picture: SUPPLIED

The rand took strain on Thursday morning as the dollar rode roughshod over a basket of currencies, reinforcing its status as the world’s reserve currency.

The strong dollar had ripple effects on commodities, with the platinum price slipping to its lowest level since 2008, casting a pall on already battling platinum producers.

The dollar built on the recent momentum, created earlier this week when US Federal Reserve chair Jerome Powell recommitted to raising interest rates, albeit at a gradual pace. 

The rand has been caught in the ebb and flow of global sentiment, weakening sharply in the second quarter before bouncing back slightly in July.

The global developments, which include fears of a trade war, will mostly likely feature in the Reserve Bank’s monetary policy committee meeting, which is expected to leave interest rates on hold.

Markets will be keen on hearing how the committee plans to approach its policy in coming months, given the volatile global environment to which the rand and local bonds are vulnerable.

These, in turn, create potential effects on the outlook for inflation, which the committee takes into account when deciding on interest rates.

Pressure accelerated in June, but at a slower rate relative to market expectations, backing the case for interest rates staying flat in the foreseeable future.

The scenario of flat interest rates takes into the account the recent batch of economic data, which has been disappointing.

At 10.39am, the rand was at R13.3977 to the dollar from R13.2572. It was at R15.5618 to the euro from R15.4308, and R17.4225 to the pound from R17.3353. The euro was at $1.1616 from $1.1640.

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