The Rand of South Africa Weakening as The Dollar Strengthens

The rand fell off a five-month high versus the dollar early Monday as the greenback rallied;  China’s reimposition of a lockdown impacted risk-taking in Shanghai.

The rand (USDZAR) was trading at roughly 14.6100 per dollar at 0605 GMT, down 0.43 percent from its closing on Friday, when it hit 14.4738, its highest level since Oct. 21, after the central bank lifted the repo rate.

“(The rand) has now hit its short-term technical support level around the 14.5000 level, where it has met with USD buying activity — this as the crisis in Ukraine continues and the Chinese continue to face another wave of COVID-19 infections,” according to Nedbank analysts. Shanghai, China’s financial center, was put on lockdown on Sunday after officials ordered a two-phased shutdown, requiring businesses and manufacturers to stop producing or operating remotely for the next nine days to conduct COVID-19 testing.

Outlook on Global Currency Market

Investors’ emphasis was on the upcoming peace negotiations between Russia and Ukraine in Turkey this week. Government bonds also fell in value, with the benchmark 2030 (ZAR2030=) maturity’s yield rising 5.5 basis points to 9.745 percent. The dollar rose versus the yen on Monday, benefiting from the monetary policy difference between the two countries.

The Dollar Index monitors the greenback against a basket of six other currencies; it was 0.4 percent higher at 99.218 at 3 a.m. ET (0700 GMT). The benchmark 10-year JGB yield crept up to a six-year high of 0.245 percent on Monday; hence, the Bank of Japan entered the market, pledging to buy an unlimited number of 10-year Japanese government bonds at 0.25 percent to keep bond rates from climbing over its primary objective.

The dollar rose versus the yen on Monday, benefiting from the monetary policy difference between the two countries. The Dollar Index, which monitors the greenback against a basket of six other currencies, was 0.4 percent higher at 99.218 at 3 a.m. ET (0700 GMT).

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