LONDON, (The Southern African Times) – South Africa’s rand weakened early on Monday as fears of a new wave of COVID-19 infections in Asia dampened demand for emerging market currencies.
New virus outbreaks triggered some lockdown restrictions in Singapore and Taiwan, and increased bids for the safe-haven dollar, as well as for gold, with investors awaiting more details on the impact of the new wave.
At 0600 GMT the rand was 0.18% weaker at 14.1600 per dollar compared to a close of 14.1350 on Friday in New York.
The rand saw mixed trade in the previous week, breaking below the key 14.00 technical on its way to a 16-month best before retreating as fears over a return of inflation in the United States sparked fears of higher lending rates there.
Caution ahead of a local decision on interest rates, due on Thursday, and consumer price-growth figures before that, has also kept the rand on the backfoot.
In a poll by Reuters last week, all 25 of economists surveyed see the Monetary Policy Committee (MPC) of South Africa’s Reserve Bank (SARB) keeping its repo rate unchanged for a fifth straight meeting at a record low 3.5% next week.
“Our focus will be on the SARB’s updated economic forecast and guidance regarding the prospects of monetary policy normalization,” said analyst at Credit Suisse Alexey Pogorelov.
“In our view, the backdrop in the domestic economy could allow the MPC to push back policy normalization, unlike the external environment, which may be in favour of early policy tightening by major developed central banks.”