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Johannesburg - The rand fell in early trade on Thursday as the dollar gained after Federal Reserve chair Janet Yellen said she was "looking forward" to the first US interest rate increase in nearly a decade.
Stocks opened lower, with telecoms company MTN Group [JSE:MTN] in the spotlight. Nigerian authorities reduced a fine imposed on MTN for failing to cut off unregistered users by more than a third, to $3.4bn.
READ: MTN fine slashed by $1.8bn as Nigeria CEO quits
MTN was up nearly 1% at R147.90, outpacing a 0.4 decline to 45 777 in the JSE Top-40 index.
READ: MTN fine slashed by $1.8bn as Nigeria CEO quits
By 09:14, the rand was trading at 14.3700, down 0.13% from Wednesday's close. The rand fell to an all-time low of R14.4950/$ on Tuesday.
A US rate increase hike is widely expected when the Fed meets later this month. When she spoke at the Economic Club of Washington on Wednesday, Yellen did not say whether an increase would be warranted at that meeting, but she did say keeping rates at zero for too long could threaten financial stability.
Yellen is scheduled to speak again on Thursday and traders expect the rand to remain under pressure.
"Given that she will most likely maintain her more hawkish rhetoric, we expect the rand to remain vulnerable to intensified Fed rate hike expectations," Barclays Africa currency strategist Mike Keenan said.
Yellen's comments sent the dollar index, which measures the greenback against a basket of six major currencies, to its highest level since April 2003. The rand remained resilient on the strength of loan agreements between China and South Africa, but then gave up some gains in early trade.
The 26 loan agreements signed on Wednesday are worth R94bn, including $500m for cash-strapped power utility Eskom.
South Africa suffers from a chronic electricity shortage that is increasing costs for industry and discouraging investment. Part of its response is to build new nuclear plants, which experts say may cost as much as $100bn.
On the fixed-income market, government bonds were mostly firmer, with the yield for debt due in 2026 shedding 1.5 basis points at 8.600%.
