Rand shines against dollar, pound
For more financial news, go to the News24 Business front page.
The rand strengthened to below R17.70/$ late on Tuesday, reaching levels last seen in October 2024.
The local currency hit R17.6702, before retreating slightly to R17.70 in early evening trading.
It has gained almost three percent over the past month.
As recently as in April, the rand traded above R19.90/$ amid fears of a DA exit from the government of national unity (GNU). At the time, the rand was also hurt by a global sell-off of riskier assets amid the turmoil unleashed by US President Donald Trump's trade tariffs.
'Much of the rand's strength is due to a combination of improved domestic sentiment and external tailwinds,' says Bianca Botes, director at Citadel Global.
'The South African Reserve Bank's (SARB) strong stance on inflation, fiscal optimism following budget clarity, and inflows from foreign investors have all contributed to a more supportive environment for the currency.'
SA's 10-year bond yield fell below 10% for the first time since 2022, signalling growing investor confidence, she adds.
Apart from calm returning to the GNU and the friendly reception of Budget 3.0, the SA Reserve Bank's campaign to lower the inflation target to 3% (from a band of 3% to 6%) has bolstered the rand and bonds.
Lower inflation will be positive for both assets, but a stricter target would also require stricter monetary policy. High interest rates make rand assets attractive to foreign investors looking to earn yield.
Meanwhile, US rate expectations and easing inflation fears are shifting, with the Fed now only expected to delay its rate cut to September.
On Tuesday, the rand also strengthened against the pound, reaching R23.87 — around its best levels since the start of April.
Sterling slipped after new UK jobs data implied further weakness in the labour market, which could influence how quickly the Bank of England cuts interest rates.
British wages rose by a slower-than-forecast 5.2% in the three months to April, pushing sterling down 0.4% against the dollar to $1.3499.
The labour market data "puts a question mark on the hawkish bias that we've seen from the Bank of England," Danske Bank FX analyst Kirstine Kundby-Nielsen said.
The BoE is due to meet next week and is expected to keep the interest rate unchanged. Money market traders are pricing in about 48 basis points of cuts by year-end, up from about 39 bps before the data.
The dollar index, which measures the US currency against six others, was flat to slightly lower at 98.95, not far from a six-week low of 98.35 it touched last week.
The index is down 8.7% this year as investors, worried about the impact of tariffs and trade tensions on the US economy and growth, fled US assets and looked for alternatives.
Trade talks
Traders were waiting for the outcome of talks between Beijing and Washington, which on Tuesday continued for a second day, amid expectations of a trade deal that could further ease trade tensions.
Officials from the world's two largest economies were meeting in London to try to defuse a dispute that has widened from tariffs to restrictions over rare earths.
"The dollar was better bid last night in Europe and Asia and it has come off here so I think we're consolidating," said Marc Chandler, chief market strategist, at Bannockburn Forex in New York, until an outcome from the trade talks is announced.
He added that what's at stake in these negotiations are not just tariffs, but also export controls, and "that's going to be the basis for the quid pro quo."
Chandler noted that there are the makings of a deal: US semiconductor chips for China's magnets and rate earths. But what should be noted, he said, is the asymmetry. "China can replace the chips that the US exports easier than we can replace their magnets and processed earths."
US President Donald Trump and his Chinese counterpart Xi Jinping spoke by phone last week at a crucial time for both economies as signs of strain emerge from the former's cascade of tariff orders since January.
Investor focus this week will be on the US consumer price index report for May, due on Wednesday. The report could give insight into the impact of tariffs, with investors wary of any flare-ups in inflation ahead of the Fed's policy meeting next week.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
30 minutes ago
- Yahoo
Powell comments, consumer confidence, PCE: What to Watch
Here's what investors are watching next week, starting Monday, June 23. Nike (NKE) will be releasing its fourth quarter results after the market closes on Thursday. Other earnings reports next week include KB Home (KBH), Carnival (CCL), FedEx (FDX), BlackBerry (BB), General Mills (GIS), Micron (MU), and McCormick (MKC). Federal Reserve Chair Jerome Powell will testify for Congress on Tuesday. More Fed commentary will come throughout the week, including from Cleveland Fed president Beth Hammack. June's consumer confidence data will be released Tuesday morning, shedding light on the state of the consumer. Personal Consumption Expenditures (PCE) data — the Fed's preferred inflation gauge — for the month of May will be out on Friday. To watch more expert insights and analysis on the latest market action, check out more Market Domination Overtime here. Time now for to watch next week. Gonna start off on the earnings front. We're getting another round of earnings, including FedEx, Micron, and Nike. Nike announced results for the fourth quarter on Thursday. That's after the markets close. Been a rough year for Nike offering big discounts to clear out product that didn't sell. All while tariffs, we know, were weighing on the company's bottom line. Analysts expecting sales could drop by about 15% compared to last year. That's in line with what Nike has been warned. Taking a look at the Fed, we're going to be getting some commentary throughout the week, including Fed chair Jerome Powell. Powell testifying in front of Congress on Tuesday, that will be for a semi-annual monetary policy report before the House Financial Services Committee. Also on Tuesday, we're going to be getting monthly consumer confidence data for June in the morning. Com is forecasting that number to tick up slightly to 99, signaling consumers are feeling slightly more optimistic about the economy than they were a month ago. And sticking with the economy, personal consumption expenditures or PCE data coming out on Friday, the Fed's preferred inflation gauge expected to hold steady at 0.1% on a month-over-month basis. 登入存取你的投資組合
Yahoo
an hour ago
- Yahoo
Fed Daly eyes fall for possible policy shift
-- San Francisco Federal Reserve President Mary Daly voiced a cautiously optimistic outlook for monetary policy and economic conditions in a wide-ranging interview on CNBC, citing signs of balanced progress on both inflation and employment. While acknowledging the potential inflationary effects from tariffs and geopolitical uncertainty, Daly affirmed that 'the economy remains in a good place, and policies in a good place.' The May inflation report offered encouragement, according to Daly, particularly in the housing and services sectors, where price moderation has continued. 'The May data just confirmed an ongoing pattern… we saw inflation continue to come down,' she said, calling the developments 'great news, both for our inflation mandate, but also for American families.' Daly outlined three scenarios for how inflation might evolve during the summer, ranging from a delayed spike to muted pass-through effects due to corporate mitigation strategies. 'We're just going to have to wait and see and collect more information,' she noted, adding that feedback from national businesses showed 'a little more optimism, cautious optimism.' Asked about the likelihood of a rate cut in July, Daly signaled a preference for a more patient approach, saying, 'For me, I look more to the fall, and by then we'll have quite a bit more information.' She emphasized that unless the labor market saw meaningful and persistent weakening, immediate easing would be unlikely. On labor availability, Daly said wage growth has remained consistent with long-run economic fundamentals, and firms report improving conditions for hiring. 'Right now, we haven't seen a broad impact… firms are telling me that they have an easier time finding workers today than they did just last year.' Artificial intelligence, another emerging economic variable, has yet to disrupt job markets in a material way, according to Daly's discussions with business leaders. 'They repeat to us that this is not a way to reduce their payrolls as much as… to augment their payrolls,' she said, noting that employers are using AI to increase productivity rather than cut staff. Daly was measured in her assessment of using tariffs as a rationale for policy shifts, saying, 'I never trust just the theory. There's really three things you have to look at: the theory helps us, history also helps us, and then you have to talk to people.' While confident in current policy settings, Daly warned against complacency amid labor market softening, saying, 'If you ask me where we are in the labor market, I would say we're at a point where additional softening could easily turn into weakening, which I don't want to see.' She cautioned against policy inaction based on inflation fears that may never materialize. Related articles Fed Daly eyes fall for possible policy shift Fed keeps rates steady, but sees fewer cuts next year on stagflation concerns WATCH LIVE: Fed Chair Jerome Powell Holds Press Conference Sign in to access your portfolio
Yahoo
an hour ago
- Yahoo
Bitcoin Rises as U.S. Debt Surpasses $37 Trillion
Bitcoin (BTC-USD) has continued to climb in 2025, reaching a market capitalization of $2.1 trillion, even as the U.S. national debt surpasses $37 trillion, according to Cointelegraph. The contrast between fiat-driven fiscal expansion and Bitcoin's fixed-supply model has drawn growing interest from institutions, sovereign funds, and individual investors. Warning! GuruFocus has detected 7 Warning Signs with MSTR. Regulatory approval of spot Bitcoin exchange-traded funds in early 2024 accelerated mainstream access, with $45 billion in inflows recorded so far this year. Major players including BlackRock (BLK, Financials), Fidelity, Strategy (formerly MicroStrategy) (MSTR, Financials), and GameStop (GME, Financials) have incorporated Bitcoin into their treasury strategies. Tesla (TSLA, Financials) also remains a high-profile corporate holder. El Salvador, which adopted Bitcoin as legal tender in 2021, has continued to advance its crypto-financed Volcano Bonds project. Bitcoin's appeal as a decentralized hedge against inflation and currency debasement has grown alongside concerns about long-term fiscal stability. While governments continue to rely on stimulus spending and debt issuance, Bitcoin's scarcity and censorship-resistant design present an alternative monetary framework. A Cointelegraph analysis suggests that if just 1% of the $7.6 trillion in U.S. stimulus spending since 2020 had been allocated to Bitcoin, it would have amounted to a $76 billion injectionroughly 3.6% of Bitcoin's current market cap. Such capital flows could have driven a 5% to 15% appreciation in Bitcoin's price due to its low float and high price sensitivity. While volatility and political risk remain barriers to sovereign adoption, Bitcoin's expanding institutional presence, technological upgrades, and cultural significance continue to reshape how investors view monetary policy and long-term value preservation. This article first appeared on GuruFocus. Error in retrieving data Sign in to access your portfolio Error in retrieving data
