Sterling collapse, US data put rand under pressure | Fin24
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Sterling collapse, US data put rand under pressure

Oct 07 2016 09:21

Cape Town - The rand is under pressure, following a global struggle against a strengthening dollar. The unit traded around R13.90 against the greenback on Friday morning.

Comments by the Federal Reserve and positive data are increasing the chances of a US interest rate hike to 64%, which puts downward pressure on the South African currency. 

At the close of local trade on Thursday, the rand traded 1.2% lower against the dollar. 

READ: Kganyago: Political turmoil takes toll on undervalued rand

The pound sterling on the other hand collapsed, dropping from £1.26 to £1.18 against the dollar before rebounding to £1.24. The rand stood at R17.31 against the pound in early morning trade. 

Adam Philips from Umkhulu Consulting is of the view that the rand could test R14 against the dollar on Friday, as the fall in sterling could have a knock-on effect. 

South African reserve figures will be released on Friday morning which will show how aggressively the South African Reserve Bank acted to absorb inflows relating to the SABMiller/Anheuser-Busch (AB) InBev deal. RMB currency strategist John Cairns expects a modest rise in reserves of about $600m, but the figure is for September and will show only 10 of the 16 days in which AB InBev could transact, Cairns said. 

In addition, all eyes will be on US non-farms payroll data. A positive figure could see the rand trading at R14.25 to the dollar. If the numbers are poor, it could lead to some volatility in afternoon trading. 

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