Rand falls on subdued risk appetite

Rand falls on subdued risk appetite

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THE rand fell in early trade on Thursday as concerns about new coronavirus infections and fresh lockdowns subdued investors’ appetite for risk. Markets were also on edge ahead of the release of US jobs data seen as crucial to the Federal Reserve’s policy outlook.

At 0630 GMT, the rand traded at 14.3000 against the dollar, 0.22 percent weaker than at its previous close.

Investors were concerned about the spread of the Delta variant of Covid-19 globally, which has led some countries to impose tighter curbs while others have extended restrictions.

South Africa, the worst-hit country on the African continent in terms of recorded cases and deaths, tightened its restrictions on Sunday.

“The foreign exchange markets are likely to remain cautious ahead of the US data tomorrow,” analysts at Nedbank said in a note.

Investors are awaiting the US non-farm payrolls report due on Friday for clues on the Fed’s next step.

Riskier currencies, such as the rand, thrive on US interest rates remaining low, because they benefit from the interest rate differential that increases their appeal for carry trade.

REUTERS

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