South African rand jumps 1% after downward revision in U.S. payrolls

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South African rand jumps 1% after downward revision in U.S. payrolls

7:42 CAT | 01 Sep 2023

File photo: Reuters

The South African rand jumped on Friday after employment data out of the U.S. showed an easing of labour market conditions, cementing expectations that the Federal Reserve may not need to hike interest rates when it meets later this month.

At 1423 GMT, the rand traded at 18.770 against the dollar ZAR=D3, around 0.6% stronger than its previous close.

The South African currency had gained more than 1% earlier in the day, paring some of its more than 5% losses in a highly volatile August.

“The argument for another Fed rate hike has thus weakened significantly, which explains the improved risk appetite that is supporting the (rand),” Danny Greeff of ETM Analytics told Reuters.

Locally, South Africa’s manufacturing activity shrank for the seventh month in a row in August, but at a slower pace than in the previous month.

Shares on the Johannesburg Stock Exchange were falling, with the blue-chip Top 40 index .JTOPI down around 0.25% from its closing level on Thursday.

South Africa’s benchmark 2030 government bond ZAR2030= was slightly weaker, with the yield up 0.5 basis point to 10.280%.

Source: Reuters