The rand has seen substantially less volatility this year despite the oil-price shock, Middle East war and changes at the US Fed.
The South African rand was trading at around R16.16 by mid-morning on Tuesday, having weakened after a speech by US Fed chairman Kevin Warsh raised expectations of a US interest rate hike.
This tends to make dollar-denominated assets more attractive while reducing the appeal of riskier emerging-market assets and currencies such as the rand.
Investec chief economist Annabel Bishop said the rand weakened from below the R16 mark to R16.19 on Friday as markets initially interpreted Warsh’s comments as hawkish, before recovering to R16.12 on Monday afternoon.
The probability of a 0.25 percentage point US rate hike in September initially jumped to 61% from 43%, strengthening expectations of higher rates across the spectrum, said Bishop. However, she said markets subsequently digested the speech and viewed it as less hawkish than their initial reaction suggested.
