South Africa’s rand weakened early on Monday against a soaring dollar as investors factored in fewer rates cuts by the U.S. Federal Reserve following stronger than anticipated U.S. jobs growth in June.
At 0645 GMT the rand was 0.35% weaker at 14.2300 per dollar, extending losses from Friday that saw the currency tumble to its weakest in seven sessions after the U.S. nonfarm payrolls data.
On Monday morning the greenback measured against a basket of major currencies had climbed to its best since June 19, snapping a rally by the rand and other emerging market currencies.
The solid jobs numbers virtually wiped out chances for a half point Fed rate cut at the end of July that had seemed a near certainty before Friday.
“The chances of a deeper correction must be considered as highly feasible now,” said chief trader at Standard Bank Warrick
Butler in a note.
“With Friday’s backdrop still fresh in the mind, coupled with continued concerns around the global trade dynamics and the Iran stand-off, I don’t think there is much value in trying to find value in S.A. rates,” Butler said.
Iran said on Sunday it will shortly boost its uranium enrichment above a cap set by a landmark 2015 nuclear deal, prompting a warning ‘to be careful’ from U.S. President Donald Trump, who has pressured Tehran to renegotiate the pact.
Bonds were flat with the yield on the benchmark paper due in 2026 steady at 8.17%.