Rand falls to 14-year lows in

Rand falls to 14-year lows in emerging-market sell-off

Last week, the South African Rand took the brunt of a sell-off in commodity currencies triggered by concerns about a slowdown in China’s growth. The Rand dropped more than 1.5% to a low of 12.680 to the Dollar. On Friday, the Rand temporarily hit a 14-year low at its weakest point.

Rand falls to 14-year lows in

On Thursday, the currency was on track for a third straight daily loss, despite the South African Reserve Bank (SARB) raising domestic interest rates by 25 basis points to curb inflationary risks. The Rand lost ground against all of the major crosses: the Yen (-1.4%), the Euro (1.3%) and the Pound (1.3%).

This week, the Fed’s FOMC will meet to decide on the monetary policy stance of the US, which will influence the US dollar. Concerns over a US rate hike will continue to keep emerging-market currencies, including the Rand, on the back foot.

A busy week on the local front kicks off on Wednesday, with the SARB’s release of the M3 money supply and private sector credit extension. Money supply is expected to have increased to 8.55% y/y in June from 8.37% y/y in May. Private sector credit extension is expected to have slipped to 9.29% y/y in June from 9.53% y/y in May.

Stats SA will be releasing national unemployment data, which also may affect the Rand’s performance. On Friday, all eyes will be on the June trade data with expectations for the trade balance to remain in surplus territory at ZAR3.6bn, down from ZAR5.0bn in May.

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