JOHANNESBURG (Reuters) -South Africa’s rand fell on Tuesday as a stronger dollar and retreating commodity prices weighed on risk assets.
At 1448 GMT, the rand traded at 17.4450 against the dollar, down 1.3% on Monday’s close.
“Our stock exchange on resources is also not doing well. It’s more of a correction than anything else,” said Andre Cilliers, currency strategist at TreasuryONE.
Gold prices fell over 4% on Tuesday, as the dollar firmed and investors booked profits after expectations of U.S. interest rate cuts and sustained safe-haven demand drove the yellow metal to a fresh record high in the previous session.
“We don’t see this (falling rand) going on too long. It will then be in reverse again,” Cilliers said.
After weakening last week, the risk‑sensitive rand had rallied on Monday on hopes of South Africa’s removal from the FATF “grey list”, only to reverse on Tuesday.
South Africa was added to the FATF list in February 2023 after criticism of its systems to stop money laundering and terrorist financing. The watchdog’s plenary meeting takes place from October 22-24.
Domestically focused investors parsed South Africa’s composite leading business cycle indicator – which aggregates vehicle sales, business confidence, money supply and other inputs— which rose 1.6% m/m in August, central bank data showed.
“For the first two months of Q3.25 versus the first two months of Q2.25 the leading indicator rose 1.7%, signalling a potential strong lift in economic activity quarter on quarter in Q2.26, given the six-month lead,” said Annabel Bishop, chief economist at Investec in a research note.
The dollar was up 0.4% against a basket of currencies as investors awaited U.S. inflation data on Friday.
On the Johannesburg Stock Exchange, the Top-40 index was last down 2.5%.
Meanwhile, South Africa’s benchmark 2035 government bond was firmer. Its yield fell 1.5 basis points to 8.91%.
(Reporting by Sfundo Parakozov and Anathi Madubela; Editing by Andrew Heavens and Alexander Smith)
