Picture: BLOOMBERG/WALDO SWIEGERS
Picture: BLOOMBERG/WALDO SWIEGERS

The rand stabilised on Thursday morning after suffering its biggest one-day drop against the dollar in four months after the US Federal Reserve caught the markets off-guard by signalling two interest rate hikes in 2023

The rand fell as much as 1.95% to R14.04/$ in the US session, its lowest level in three weeks, before pulling back slightly to trade at R13.97/$.

The steep drop comes as the spot price of Brent crude was hovering at a two-year high at about $73 a barrel, making an increase in fuel prices more likely if the scenario persists.

The potential hikes in US interest rates detract capital from emerging markets like SA, which are perceived as risky.

Fed chair Jerome Powell also indicated that the world’s most influential central bank will consider scaling back its bond purchases.

The yield on the benchmark US 10-year note also steadied at 1.57% in early trade, after rising  by eight basis points, the most since early March, and boosting the value of the dollar relative to other currencies.

Asian equities were mixed on Thursday, with Japan’s Nikkei 225 losing 1% but Hong Kong’s Hang Seng’s index rising 0.20%.

“The price action in Asia today suggests nervously cautious rather than a panicked charge for the exit door. I would suggest that sentiment is fragile,” said Jeffrey Halley, senior market analyst at Oanda.

The JSE will play catch-up after a public holiday, but gold stocks could come under considerable pressure after the gold price fell 2.5% in the US session before recovering slightly to trade 0.39% at $1,817.98/oz. 

mahlangua@businesslive.co.za

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