Rand strengthens against dollar after interest rate hike
THE rand traded at two-week highs against the dollar yesterday, still boosted by the central bank unexpectedly raising interest rates the previous day to curb inflation pressures.
Stocks ended slightly higher, led by Mr Price as investors piled into the discount clothes retailer after a broker upgraded the stock to “buy”.
The rand climbed to 13.8900 per dollar during yesterday’s session, its strongest since November 6, and was trading at 13.9300 by 1550 GMT, up 0.7 percent on the day.
This was after the central bank raised the benchmark repo rate by 25 basis points on Thursday, warning that failure to act on inflation risks could worsen the country’s already weak growth.
Traders and analysts, however, warned the currency could come under renewed pressure should the US Federal Reserve hike lending rates in the world’s biggest economy next month, as widely expected.
“The rand is in an interesting attempt to establish a new, bullish channel, but it is unlikely to persist through December, as market jitters arise again in the lead up to the December FOMC (Federal Open Market Committee),” Investec analyst Annabel Bishop said.