JOHANNESBURG — The rand lost ground in the late afternoon on Monday after earlier recovering strongly following the decision on Friday by ratings agencies Standard&Poor’s and Fitch to keep South Africa’s sovereign ratings unchanged.
The rand was weaker on Monday after the dollar gained renewed strength against the euro ahead of today’s rate decision by the US Federal Reserve’s Federal open market committee (FOMC).
US rates are expected to remain unchanged at present low rates, but speculation has been rife that the Fed could change its “considerable time” wording in its policy statement — indicating when interest rates could rise — to one acknowledging the stronger US economic performance and possible earlier increases.
At 3.31am, the rand was at R11,6290 to the dollar, after recovering to R11,5244 on the day, from a close of R11,5565.
The rand was at R14,4476 against the euro from R14,4079 at Friday’s close, and at R18,1935 against the pound from R18,1739 previously.
The euro was at $1,2427 against the dollar from $1,2464 previously.
An analyst said although the ratings agency decision provided some relief for the rand, the focus had now shifted to the FOMC decision.
Local issues, however, remained a stumbling block for the currency, especially as they would in all probability not be solved in the short term.
“The most significant of these remains the lack of a consistent supply of electricity,” he said.
The rand weakened to a six-year low of R11,7225 to the dollar on Friday before the ratings decision was made. It then recovered 20c after the announcement.
— BD Live