Rand slips past R16.60/$ as US data takes centre stage

The rand fell through the R16.60 mark against the US dollar during intraday trading on Thursday, reaching its weakest level since July.

By 11:55 on 1 October, the local unit had reached R16.61/$, before strengthening marginally to trade within a narrow range of R16.41 to R16.57.

The rand has largely been impacted by developments in the US rather than domestic factors.

Bianca Botes, managing director at Citadel Global, said the rand had surrendered its modest gains of recent days as a firmer US dollar and rising global yields continued to weigh on emerging-market currencies, including the rand.

Rising yields pull global money into the dollar, but they also signal that investors are worried about the US’s economy and growing debt, and want to be paid more for that risk.

There are also concerns that the ongoing US-Iran war could continue to push international oil prices higher.

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Market watchers expect more pressure on the rand as several US economic indicators due on Thursday are likely to provide clues about the health of the world’s largest economy and the future path of interest rates.

Later in the day, US initial jobless claims and the Institute for Supply Management’s manufacturing survey are due to be released. These figures will set the tone ahead of Friday’s closely watched non-farm payrolls report, the monthly gauge of the health of the US job market.

Botes added: “We will also take note of what a heavy slate of Federal Reserve (Fed) speakers have to say.”

The data and comments from Fed officials will be closely watched for clues about the direction of US interest rates and, by extension, the dollar.

Market participants in South Africa and the US are also watching closely for signs of further interest-rate increases. In September, interest rates were raised by 25 basis points in both South Africa and the US.

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Goldman Sachs has pushed back its forecast for the next US rate increase from October to December and expects two hikes in total for the remainder of 2026.

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On the South African side, Bank of America has a more hawkish outlook, expecting two rate increases – one in September and another in November – taking the repo rate to a peak of 7.5%.

When US interest rates rise, investors can earn more by putting their money in US investments. They then sell emerging market assets (like South African bonds and stocks) and move their money to the US.

This means they sell rands and buy dollars. When more people sell the rand, its value falls.

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