Rand weaker on softer US GDP growth numbers
The rand was weaker against the dollar in the late afternoon on Thursday as uncertainty affected market sentiment following the release of US gross domestic product (GDP) growth data.
The first estimate of third-quarter US growth‚ released on Thursday‚ showed the world’s biggest economy expanded at a 1.5% annualised pace‚ sharply down from the previous quarter and below the expected 1.6%.
The number‚ while not spectacular‚ suggested the economy continued to grow at a steady pace despite the pressures from a strong dollar and weakness abroad‚ Dow Jones Newswires said.
US jobless claims show continuing improvement in the labour market. Initial jobless claims rose 1‚000 to 260‚000 in the week ending October 24‚ somewhat below consensus expectations of 265‚000.
Earlier‚ the dollar gained against the euro following a US Federal open market committee statement on Wednesday‚ in which it said it could still hike rates from their near-zero levels at its December meeting.
“The Fed explicitly warned investors a December rate hike was on the table‚” the newswire said.
The possibility of higher rates buoyed the greenback as they would make the currency more attractive to investors.
At 3.27pm the rand was at R13.8716 against the dollar from its previous close of R13.7138.
The local currency was at R15.1583 against the euro from R14.9850 and at R21.1732 against the pound from a previous close of R20.9373.
The euro was at $1.0927 from a previous close of $1.0926.
Investec economist Annabel Bishop said market expectations that the committee would not hike the Fed funds rate on Wednesday night‚ combined with a tentative risk-on feeling‚ saw the rand weaken only mildly‚ from R13.76/$ to R13.80/$‚ although it was at risk in the short term of moving closer to R14/$.
Growing market expectations of a December US interest rate hike would likely see the domestic currency pierce R14/$ again‚ even moving closer to R14.20/$ in the remaining quarter’s months‚ she said.
“We remain with our view of December lift-off‚” Ms Bishop said.