Uupdate prices, add inventory
JOHANNESBURG, June 25 (Reuters) – The South African rand traded stronger on Friday as the dollar weakened amid uncertainty over which direction the US Federal Reserve would take on rate hikes.
A series of mixed signals from the Fed over the past two weeks have made the rand nervous as investors fear that rising inflation in the United States will force the Fed to restrict loose monetary policy in 2022 instead of 2023 as expected.
At 1520 GMT, the local currency ZAR = was trading at R14.108 against the dollar, 0.62% stronger from yesterday’s close.
By early June, the rand had hit a 28-month high, making it the best-performing emerging market currency in hopes that an accommodating Fed would keep dollars flowing into riskier markets.
It has since lost more than 5% as investors continue to brace for uncertainty. But they hope it is a transitional period.
“While the US Federal Reserve (Fed) stall and other central bank news may slow the devaluation of the US dollar, it seems to us that, for now, the weakening trend in the dollar is going to abate. continue, “said Nolan Wapenaar, co-director of investments at Anchor Capital.
About $ 100 currently in circulation in the United States. $ 25 was printed at some point in the past 18 months, Wapenaar said, which would keep pressure on the greenback constant, keeping silver flowing to emerging markets in the short term.
“We believe that the momentum of strengthening the local currency may persist a bit longer,” he said, adding that the brokerage’s long-term view was for the fair value of the rand to remain between 14. 5 and 15 rand. -range per dollar.
Johannesburg Stock Exchange (JSE) shares edged down on Friday, but overall performance was mixed as investors continued to reflect on the path of inflation and a possible Fed rate hike.
Inflation eats away at the future value of equity investments and higher interest rates increase the cost of capital for companies to finance their growth.
The benchmark all equities .JALSH closed 0.07% lower at 66,215 points while the top 40 largest companies index .JTOPI finished down 0.08% to 60,140 points.
In bonds, the yield of the benchmark instrument 2030 ZAR2030 = was up 0.1%.
(Reporting by Promit Mukherjee; Editing by Angus MacSwan and Jonathan Oatis)
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