South Africa's rand falls but set for weekly gains

JOHANNESBURG, July 30 (Reuters) - South Africa's rand fell early on Friday, but was on course for weekly gains on renewed signs that the U.S. Federal Reserve might not taper economic support and hike interest rates in the near term.

At 0620 GMT, the rand ZAR= traded at 14.6030 against the dollar, 0.37% weaker than its previous close.

"As the month and the week draw to a close, we are likely to see some position squaring going into the close, and liquidity is likely to be tested," analysts at Nedbank said in a note.

The rand is up more than 1% since Monday, thanks to a weaker dollar after Fed Chairman Jerome Powell wrongfooted bulls after a policy meeting this week by saying that rate increases were "a ways away" and the job market still had "some ground to cover".

Riskier currencies such as the rand thrive on U.S. interest rates remaining low because they benefit from the interest rate differential that increases their appeal for the so-called carry trade, in which investors borrow in a low yielding currency to invest in higher yielding assets.
Reporting by Olivia Kumwenda-Mtambo; Editing by Alex Richardson

Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.

All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.

Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.

We are using cookies to give you the best experience on our website. Read more or change your cookie settings.

Risk Warning: Your capital is at risk. Leveraged products may not be suitable for everyone. Please consider our Risk Disclosure.