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Rand weakens against the dollar as risk aversion returns to the market with weak growth in China

NS Siphelele Dludla 51m in front

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Rand started the week hindly yesterday and fell to Rand 14.78 against the dollar as risk aversion returned to the market due to slowing economic growth in China.

This was a distant cry for Rand as it closed strong and strong on Friday, the dollar softened slightly and risk sentiment improved, closing 1.2% solid on the day at R14.59.

China’s economic growth was lower than expected in the third quarter, up 4.9% from 7.9% in the previous quarter.

This was the slowest expansion since the third quarter of last year, due to power shortages, supply chain bottlenecks, and headwinds caused by a persistent real estate bubble.

Currency strategists at TreasuryONE Andre Cilliers said emerging market currencies have receded due to China’s slow growth and sluggish industrial production.

“If you go above Rand’s R14.70 level, you’ll be able to make more important fixes to R14.80,” says Cilliers.

However, as the risk-off settled down a bit and the US taper was more likely to be pushed out in December, Rand managed to rise later that day, hovering to the greenback near R14.68.

Investec’s chief economist, Anabel Bishop, said Rand will continue to fluctuate in terms of tapering, global inflation and, in fact, sentiment for potential rate hikes in South Africa.

The South African Reserve Bank strongly suggests that interest rates will rise in the fourth quarter after a suspension of interest rates in consecutive quarters as inflation is on the rise.

Major consumer inflation in September is expected to reach 5.1% year-on-year with food and fuel inflation rising from 4.9% in August.

Bishop said the continued rise in crude oil prices, in particular, has also raised some short-term concerns that will boost inflation in November.

The latest updates on fuel price component movements show that recent high oil price movements have raised South African gasoline prices by about R1 per liter.

“The market is still paying attention to the release of US economic data. Rand is at risk of weakening, especially as there are signs that US employment market data is significantly strengthening. December taper,” Bishop said. Said.

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Rand weakens against the dollar as risk aversion returns to the market with weak growth in China

Source link Rand weakens against the dollar as risk aversion returns to the market with weak growth in China

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