JOHANNESBURG(Reuters) -The South African rand weakened this week, along with other emerging market currencies, as the dollar firmed on uncertainty over further U.S. rate cuts following the Federal Reserve’s more conservative positioning on interest rates.
At 1343 GMT the rand traded at 17.36 against the dollar, down 0.4% from Thursday’s close.
On Wednesday, the U.S. central bank cut interest rates by a quarter of a percentage point for the second time this year, taking the benchmark overnight rate to a target range of 3.75%–4.00%.
“Attention has now fallen back to (Fed Chair Jerome) Powell’s comments after the rate cut, where he told a press conference that a rate cut in December was not a dead certainty,” said Adam Phillips, treasury specialist at Umkhulu Treasury.
Like other risk-sensitive currencies, the rand often takes cues from global drivers such as U.S. policy and economic data.
The dollar last traded 0.3% stronger against a basket of currencies as markets price in the probability of a 25-basis-point cut from the Fed in December.
Data from the country’s revenue service showed that South Africa recorded a trade surplus of 21.76 billion rand ($1.26 billion) in September, more than the 12.50 billion rand surplus expected by analysts polled by Reuters.
Domestically-focused traders will next week look to a monthly South African purchasing managers’ index (PMI) survey that will shed light on sentiment in the country’s manufacturing sector, along with car sales figures and foreign reserves data for the month of October.
On the Johannesburg Stock Exchange, the Top-40 index was last down 0.4%.
South Africa’s benchmark 2035 government bond was also weaker, with the yield up 3 basis points to 8.89%.
(Reporting by Anathi Madubela and Sfundo Parakozov; editing by Susan Fenton and Mark Heinrich)
