The rand touched its worst level against the dollar on Monday afternoon at R14.44 following Friday’s terrorist attacks in Paris‚ as did other emerging currencies.
Its previous worst level against the dollar was R14.4286 on Friday.
The geopolitical tension reduced appetite for risky assets and the dollar benefited from its safe-haven status‚ weighing on the rand.
Meanwhile‚ local currency traders are awaiting consumer price index data for October and retail sales data for September due out on Wednesday. The Reserve Bank’s much-anticipated interest rate decision is expected to be announced on Thursday.
At 3.31pm the rand recovered slightly to R14.3824 from R14.4017 at the same time on Friday.
The rand was at R15.4349 against the euro from R15.4728 on Friday and at R21.8582 against the pound from Friday’s R21.9411.
The euro was at $1.0731 from trading at $1.0741 on Friday.
Bidvest Bank said in a weekly market report that the decision on whether to raise the local repo rate by 25 basis points to 6.25% would be a close call.
Meanwhile‚ the severe domestic drought posed substantial risks to the food inflation outlook‚ Bidvest said‚ because food scarcity is not only pushing up local prices‚ but also generating the need to import foodstuff at an unfavourable exchange rate.
With an interest rate hike by the US Federal Reserve imminent‚ it was likely that the Reserve Bank would raise domestic interest rates by 25 basis points‚ Bidvest said.
Edited by: RDM News Wire
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