Wednesday, 15 July 2015 21:51
JOHANNESBURG: South Africa’s rand suffered on Wednesday, falling one percent at one stage, as the dollar climbed boosted by signals from the U.S. central bank that a rate hike there would happen by the end of the year.
At 1500 GMT the rand slipped 0.76 percent to 12.4150 per dollar, erasing gains that had carried the unit to an overnight close of 12.3255, a 1 1/2 week high.
The index measuring the greenback against major currencies rose 0.5 percent as the dollar put emerging markets on the backfoot after Fed Chair Janet Yellen said the bank remained on track to raise interest rates this year.
“What Yellen said is nothing new, but its given the markets a wake up call. But there’s also been lots of demand from importers below the 12.40 level,” said Ion de Vleeschauwer, chief currency dealer at Bidvest Bank.
Government bonds remained in narrow range, with the benchmark issue due 2026 shaving 1.5 basis points to 8.15 percent.
Retail sales grew in May but at slower rate than in April.
“Recent weakness in the retail sector is expected to intensify during the remainder of 2015 and into 2016 as consumer income comes under pressure, said Kevin Lings, head economist at Stanlib.
Consumers may come under more pressure if South Africa’s Reserve Bank lifts interest rates, unchanged since July 2014, at next week’s policy meeting.
