The South African Rand weakened against all major currencies Thursday amid a renewed leg higher by the US Dollar and as traders responded to a South African Reserve Bank interest rate statement that fell short of what some were expecting.
The Rand will weaken further than was previously expected this year, according to the latest forecasts from analysts at ABSA, who argue that offshore and domestic challenges will weigh on the South African currency during the months ahead.
The Rand could receive a boost next week if the South African Reserve Bank throws it a lifeline during Thursday's interest rate announcement, according to analysts at Commerzbank, although any respite for the currency is likely to prove short-lived.
The Rand fell Wednesday and could be on course for another bout of steep losses after President Donald Trump instructed US trade representatives to prepare their largest round of Chinese trade tariffs to date, placing the so called "trade war" back in the spotlight and emerging market currencies under fresh pressure.
The Rand could be close to bottoming out after months of heavy selling by international investors, according to one analyst, although others still expect more losses to come and are flagging the government's land reform agenda as a significant risk to the currency.
The Pound-to-South-African-Rand rate rose last week as the emerging market currency universe remained under pressure due to unease over President Donald Trump's confrontational trade agenda which, having stoked a stronger US Dollar and widespread risk aversion in global financial markets during recent days, is expected to weigh on the Rand again this week.
The South African Rand starts the new week at a disadvantage against most major developed economy currencies owing to a notable drop in investor sentiment courtesy of ongoing international trade war jitters.
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