JOHANNESBURG – The rand firmed in early trade on Monday as the dollar dropped after soft US payrolls data fuelled speculation that the Federal Reserve may stop raising interest rates after a highly likely move next week.
At 0630 GMT, the rand traded at R14.1050 per dollar, 0.53% firmer than its close of R14.1800 on Friday.
US jobs growth slowed in November, data released last week showed, while monthly wages increased less than forecast, suggesting some moderation in economic activity that could support expectations of fewer interest rate increases from the Federal Reserve in 2019.
Expectations of fewer US interest rate hikes boost investors’ appetite for emerging markets assets, which offer higher returns but carry more risk.
The local market focus is on October mining and manufacturing output numbers due on Tuesday, and November consumer price inflation data and October retail sales figures expected on Wednesday.
“The rand market did not take kindly to last week’s weaker-than-expected current account data and is likely to be skittish ahead of this week’s mining, manufacturing and retails sales releases, which will give us the first glimpse of fourth-quarter economic activity,” RMB analyst Nema Ramkhelawan-Bhana said in a note.