WOOLIES: 3,351 +14 (+0.42%)
S.Africa's rand slides after U.S. Fed dashes expectations of deeper rate cuts
JOHANNESBURG, Aug 1 (Reuters) - South Africa's rand
retreated early on Thursday along with other emerging markets
currencies, a day after the U.S. Federal Reserve cut lending
rates but ruled out an extended cutting cycle.
At 0645 GMT the rand was 0.4% weaker at 14.3975 per
dollar, its weakest since June 21, compared to an overnight
close of 14.3400.
While investors had been expecting the Fed to trim rates by
25 basis points at last night's policy meeting, Chairman Jerome
Powell poured water on the possibility of more cuts, saying
"it's not the beginning of a long series of rate
Traders still see one more rate cut this year, but the
hawkish tone lifted the dollar. The dollar index was up
0.3% at a two-year high.
The tame outlook for U.S. rates adds to economic pressures
faced by the rand at home after unemployment hit an 11-year high
and the fiscal and credit ratings risk posed by power utility
Eskom continued to unnerve investors.
"The rand is likely to remain under sustained pressure, with
local factors also weighing on it. The focus is now likely to
shift to the U.S. NFP data release tomorrow," traders at Nedbank
said in a note.
Bonds also weakened, with the yield on the benchmark 10-year
government issue climbing 7 basis points to 8.395%,
its highest in nine weeks.
In equities, retailer Woolworths said it expected
earnings to fall as much as 5% this year due to further
impairments on its David Jones department store
(Reporting by Mfuneko Toyana
Editing by Raissa Kasolowsky)
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