The rand was slightly weaker in early trade on Friday, catching its breath after a rally that has seen it gain about 5% against the dollar this week.
The risk-sensitive rand has been a big beneficiary of cooling US inflation, which has stoked speculation that the Federal Reserve could pause its interest rate hikes after this month and driven the dollar to its weakest since April 2022.
At 08:48, the rand traded at R17.96 against the dollar.
The rand broke below R18 to the dollar for the first time in three months on Thursday.
Read: Fed set to raise rates in July despite inflation slowdown
“The weakness in the US dollar has filtered through to local markets, with the rand notching up impressive gains,” Rand Merchant Bank analysts said in a research note.
“Should the momentum be maintained, rand bulls are now looking at the lows of March 2023, just above R17.60, as plausible in the coming sessions.”
When the South African economic data calendar is light, the rand often takes its cues from global drivers.
Next week market attention will turn to local inflation data on Wednesday and a central bank interest rate decision on Thursday.
A Reuters poll on Thursday predicted the South African Reserve Bank would leave rates on hold next week, but it was a close call with 12 of 21 economists forecasting no change and nine saying rates would be hiked by another 25 basis points to 8.50%.
Listen as Fifi Peters chats with RMB’s John Cairns about the day’s currency moves:
You can also listen to this podcast on iono.fm here.
