JOHANNESBURG (Reuters) -South Africa’s rand slipped slightly on Tuesday, as the prospect of more Western sanctions against Russia and possibly bigger interest rate hikes by the U.S. Federal Reserve to rein in inflation supported the dollar.
At 1530 GMT, the rand traded at around 14.6275 against the dollar, down 0.19% against its previous close.
The safe-haven dollar was supported by the European Commission’s proposal on Tuesday to make sweeping new sanctions against Russia, with further measures also anticipated from the United States.
At the same time, global markets were looking to Wednesday’s release of minutes from the Federal Reserve’s last policy meeting for hints on how much the U.S. central bank is likely to raise interest rates by next month.
Such global factors tend to be the biggest influence on the rand, however Investec said in a note that the currency had proven less volatile in the face of such factors than other emerging market peers this year.
Some factors supporting the rand at the moment included cuts to South Africa’s fuel levy in response to rising fuel prices – showing improved flexibility and governance that cheered markets – and the removal of negative outlooks set for the country by credit agencies Fitch and Moody’s, Investec said.
But these, as well as Monday’s removal of the national state of disaster, in place for more than two years in response to COVID-19, were not enough to lift the rand on Tuesday.
The price of key South African commodities, such as gold and platinum, were also steady on Tuesday. Higher prices of the precious metals tend to boost both the rand and local stock markets.
The Johannesburg Stock Exchange’s Top-40 Index fell 0.87% to 68,344 points. The broader All-Share Index was down 0.72% to 75,287 points.
Africa’s largest mobile operator MTN was the biggest loser on the blue-chip index, tumbling 7.76%. Its key Nigerian division said on Tuesday it would issue 150 billion naira ($361.25 million) in commercial paper to diversify its financing options.
Bonds also weakened slightly, with the yield on the benchmark instrument due in 2030 rising 2.5 basis points to 9.580%.
($1 = 415.2200 naira)
(Reporting by Olivia Kumwenda-Mtambo; Editing by Susan Fenton)
