Rate hikes: don’t pop the bubbly just yet
The rand’s rapid rebound, combined with a sharp decline in local inflation, could be enough to prevent the Reserve Bank from raising rates again. But with major central banks remaining hawkish and the currency still vulnerable, it’s not yet a done deal
The rand has reversed the severe losses it sustained after US ambassador Reuben Brigety’s recent accusation that South Africa sold arms to Russia last year. This is despite lingering geopolitical tensions between the two countries and most people’s view that the Federal Reserve is not done hiking rates in the US.
In the wake of the furore surrounding Brigety’s announcement and the related matter of the Russian ship Lady R, the rand-dollar exchange rate hit a record R19.92/$ level in May. In a dramatic move, it had recovered to R18.18/$ by late last week. (However, it had weakened back to R18.48/$ at the time of writing.)..
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