JOHANNESBURG (Reuters) – South Africa’s rand jumped on Friday after comments from Federal Reserve Chairman Jerome Powell suggested an interest rate cut next month.
At 1520 GMT, the rand was trading at 17.71 rand to the dollar, up 1.82% from its previous close.
“The time has come to adjust policy,” Powell said at the Kansas City Fed’s annual economic conference in Jackson Hole, Wyoming. “The direction is clear, and the timing and pace of rate cuts will depend on incoming data, evolving expectations, and the balance of risks.”
As with other risk-sensitive currencies, the rand often takes cues from global drivers such as US monetary policy as well as key domestic factors.
The US dollar fell 0.75% against a basket of currencies after Powell’s comments.
Next week, local investors will turn their focus to July producer inflation figures, money supply, trade and the budget balance for clues on the health of the South African economy.
On the Johannesburg Stock Exchange, the Top-40 index of leading shares closed up 0.73%.
South Africa’s benchmark 2030 government bonds performed even stronger, with the yield falling by about 13.5 basis points to 9.075%.