The rand fell on Monday as the dollar recovered on expectations of a number of U.S. Federal Reserve rate hikes.
Rand traded at 15.4300 against the dollar, down around 0.4% from its previous close.
Global capital flows are being driven by U.S. data, Federal Reserve speak, and the narrative surrounding prospective Fed policy at the moment, say analysts at ETM Analytics.
Despite the Fed not moving rates at its Jan. 25-26 meeting, an increasing number of hawkish comments are coming from both within and outside the institution.
Since the beginning of 2022, the rand has gained over 3% against the dollar, making it one of the best-performing currencies in emerging markets.
Investec’s analysts say the rand typically fares well from December to February when most northern hemisphere traders are at work, and the summer months are when risk-taking is less prevalent.
In this week’s economic data releases, we will see mining numbers for November on Tuesday, consumer inflation numbers for December on Wednesday, and retail sales figures for November on Thursday.
Traders expect the South African Reserve Bank to raise rates for the second time in a row after November when it announces its first monetary policy decision of the year on Jan. 27.
Additionally, government bonds were weaker in early deals, with the benchmark 2030 instrument rising 3.5 basis points to 9.405%.
