The South African Rand continued its upward trend against the US dollar on Friday, fueled by expectations of interest rate cuts by the Federal Reserve later this year. The Rand traded at 18.2250 against the dollar at 1543 GMT, up about 0.2% from its previous close.
This strengthening comes amidst a volatile week for the Rand, which is largely influenced by global economic trends, particularly US monetary policy. The US dollar index has weakened against a basket of currencies, with data showing a slowdown in the US job market in June and an increase in unemployment. This has increased investor expectations of an interest rate cut as early as September, a trend that was already gaining momentum following softer-than-expected economic data earlier in the week.
“The Rand has gained from the weaker dollar after a volatile week of trading,” said Andre Cilliers, currency strategist at TreasuryONE. He added that the Rand is likely to closely follow the dollar’s movements as attention shifts away from local political developments.
South Africa’s new government was sworn in on Wednesday after the May election, where the African National Congress lost its majority for the first time since the end of apartheid. While these local events are significant, the Rand is currently primarily driven by global trends.
The positive performance of the Rand was mirrored in the stock market, where the Top-40 index closed 0.35% higher. South Africa’s benchmark 2030 government bond also strengthened, with its yield falling 2.5 basis points to 9.76%.