SOUTH Africa’s rand weakened on Tuesday as the dollar steadied and global investors awaited further clues on the direction of global lending rates.
At 1515 GMT, the rand traded at 14.2750 versus the dollar, 0.35% below its previous close, after giving up small overnight gains.
In recent weeks the rand has tended to take its cue from global drivers including the dollar, which has been losing traction as retreating Treasury yields dented its allure.
The dollar index rose around 0.2% on the day.
The demand for yield by investors facing low to zero rates in developed markets has kept the rand strong, although volatility remains high as South Africa’s structural economic growth issues remain a concern.
“The unsustainability of the ZAR’s recent strength is also evident in the options market, where it ranks worse in terms of implied vols (volumes) relative to other EM currencies over longer durations than
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