Although the rand has made strong gains recently, US policymakers look set to deliver the local currency a major blow later this month.
Although a pause in interest rates will be positive for South African consumers, it could spell trouble for the rand after it staged a mid-year comeback against the dollar.
Bishop said that the US dollar weakness was critical to the rand’s rebound, with the greenback reaching 1.1248 to the euro on Friday – its weakest rate since February 2022 when the rand was closer to around R15.00/USD. The US’s Federal Open Market Committee has its next interest rate meeting near the end of the month, 26 July – a week after the MPC makes their decision.
“Market expectations of a soft landing globally for the world economy add to optimistic financial sentiment. In addition, the US’s University of Michigan sentiment and current conditions data on Friday proved better than expected.”
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