The rand is expected to be beaten around by global markets in the coming months, as inflationary and interest rate pressure from central banks in the US and the European Union continue to dominate global market movements.
Investec chief economist Annabel Bishop said that markets will react directly to the US CPI figures coming this week, influencing the US dollar and so the rand. “Market expectations for September’s US interest rate move have been fluctuating, closer to between 50bp and 75bp earlier in the month, and a lower than expected CPI print could see the market move its rate hike view back closer to 50bp if this occurs,” she said.
The economist said that the rand could strengthen in the short-term, but any gains will likely be temporary as local issues like persistent load shedding continue to drag on sentiment. A softer rand is one of the key contributing factors that will likely push interest rates higher in the September meeting, adding that its projections from the hike have shifted from a 50bps hike to 75bps.
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Source: ReutersAfrica - 🏆 31. / 53 Read more »