U.S. debt ceiling concerns hurt South African rand before rate decision

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U.S. debt ceiling concerns hurt South African rand before rate decision

7:44 CAT | 25 May 2023

File photo: Reuters

The South African rand was weaker in early trade on Thursday as investor concerns over the U.S. debt ceiling boosted the dollar and hurt riskier assets, before an interest rate announcement by South Africa’s central bank.

At 0625 GMT, the rand traded at 19.3500 against the dollar ZAR=D3, down about 0.5% on its previous close.
The dollar =USD was up around 0.2% against a basket of global currencies after hitting a two-month high on safe-haven demand linked to mounting worries about a potentially disastrous U.S. default.

The South African Reserve Bank will announce its latest repo rate decision ZAREPO=ECI at a news conference starting around 1300 GMT.

Analysts and financial markets are predicting it will unveil its 10th consecutive rate hike as it tries to bring inflation back within its target range of between 3% to 6%.

Inflation has been above that band for around a year, with data on Wednesday showing April consumer prices were up 6.8% year on year ZACPIY=ECI.

South Africa’s benchmark 2030 government bond ZAR2030= dropped in early deals, the yield up 9 basis points to 11.135%.

Source: Reuters