Rand weakens again on renewed dollar strength

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The rand lost ground again in early-morning trade on Friday, as the dollar firmed after a soft patch on Thursday following the US Federal Reserve’s decision to keep interest rates on hold.

External factors such as demand for the dollar are dictating most of the swings in the global currency markets, FXTM analyst Jameel Ahmad said.

“The unexpected turnaround in dollar momentum over the past couple of weeks had stunned investors,” he said.

The dollar was further supported by negative data from the eurozone, with first-quarter gross domestic product (GDP) growth coming in below expectations.

Eurozone inflation for April also came in below market expectations, while in the UK, a purchasing managers index for services was also below the consensus forecasts.

At 9.15am on Friday the rand was at R12.6165 to the dollar from R12.5862, having reached R12.6769 in the early morning. The rand was at R15.0967 to the euro, from R15.1668, and at R17.1124 to the pound from R17.0916.

The euro was at $1.1967 from $1.1988.

Market observers looking for signs of more aggressive monetary policy tightening from the Fed were initially disappointed, resulting in a slight pullback in the greenback.

The world’s most influential central bank gave little away in terms of guidance about future policy moves, but the market is now pricing in four increases by the Fed this year, instead of the three previously expected. – BusinessLive

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