JOHANNESBURG: South Africa’s rand retreated early on Thursday after minutes from the US Federal Reserve’s September meeting struck a hawkish tone, draining some of the enthusiasm for emerging currencies that lifted the local unit to a two-week peak.
At 0640 GMT the rand was 0.26 percent weaker at 14.2900 per dollar, having risen to 14.1050, its best since Oct. 1, as the New York session kicked off before the release of the Fed minutes breathed life back into the greenback rally.
The minutes from the meeting showed every Fed policymaker backed raising interest rates, pushing the dollar index to its firmest in a week and knocking emerging currencies that had befitted from a return of carry trade action.
“The Turkish Lira has found massive favour amongst those seeking fortune and fame with their incredibly highs yields. The rand is of course benefiting in part from some of this goodwill,” said chief trader at Standard Bank Warrick Butler.
A better-than-expected retail sales print on Wednesday soothed fears Africa’s most industrialised economy was still wallowing in recession, and mining production figures due at 0900 GMT will be watched for further signs of recovery.
Bonds also suffered as US 10-year treasuries climbed. The yield on the benchmark 2026 paper was up 4.5 basis points to 9.165 percent.
Stocks were due open lower at 0700 GMT, with the JSE securities exchange’s Top-40 futures index down 0.94 percent.