The rand continued to get battered in trade on Monday (13 June), losing further ground to the major currencies following a sell-off on Friday, as investors rushed to buy ‘safe haven’ dollars amid data that showed US inflation accelerated in May.
The rand relinquished all its recent gains, having traded from a strong point of R15.16 on Thursday last week – its best level since mid-April.
Traders now see the Fed jacking up borrowing costs by 175 basis points by its September decision, which would mean at least one 75 basis-point move, it said. “The dollar has assumed the role of the global stagflation hedge with USD cash being one of the few financial assets offering returns,” George Saravelos, Deutsche Bank’s global head of currency research in London, wrote in a note.
Treasury One said in a short note on Monday that the unexpected rise of 8.6% in the year-on-year US inflation number on Friday has seen a huge risk-off move in markets.
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