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On Friday, the rand was trading at levels last seen in mid-November 2023, as the dollar weakened and commodity prices rose.
The South African currency was at R18.19 by late afternoon, after falling below R18.15 earlier in the day.
It has risen about 1.5% against the dollar over the past week, and more than 4% since mid-April. Less than a month ago, $1 was worth almost R19.32.
The dollar fell for the week against most currencies as market speculation continued to swirl about when the Federal Reserve might cut interest rates amid signs of cooling inflation and a softening U.S. economy.
Wednesday's data showed that consumer prices rose more slowly than expected in April, but various policymakers have given little clarity on when they will cut interest rates, limiting the dollar's fall this week. It became.
The dollar index against the country's six currencies rose 0.2% to 104.73 on Friday, but is still trending down about 0.5 percentage point for the week.
Futures markets are currently pricing in a 46 basis point (bp) rate cut by the US Federal Reserve by the end of this year.
“Comments from Fed officials this week continue to indicate that the Fed is prepared to move to lower rates relatively quickly once supporting evidence becomes available,” MUFG currency analysts said in a note. Ta.
But while investors continue to price in a Fed rate cut later this year, questions remain, said Kasparas Treunich, portfolio manager at Griffon Asset Management.
“We're not confident, especially given the month-over-month movement in inflation this year. It depends on the data, and the Fed's inflation target remains at 2%.” The US inflation rate in April was 3.4%.
In Europe, markets are pricing in interest rate cuts starting in June, but recent data points to a better-than-expected rate cut. Germany's economy grew more than expected last quarter, and investor morale is at a two-year high.
Eurozone consumer inflation data for April released on Friday was 2.4% compared with the same month last year, in line with a Reuters poll. The euro fell 0.2% on the day to $1.0844. The dollar has appreciated by about 0.7% this week as well.
ECB Vice President Luis Deguindos said on Friday that euro zone policymakers are increasingly confident that easing price pressures will ease inflation to target next year.
Treunicht said the rand also received support from higher prices for metals, particularly copper, gold and platinum.
“This is clearly beneficial for commodity producing countries like South Africa.”
The price of platinum on the futures market has risen more than 13% in the past month.