When the Federal Reserve announced that it would stop raising interest rates, the rand reversed previous gains, and South African markets fell on Thursday as global concerns about the banking industry spread around the world.
The banking sector almost drove the local market down by 3.2%. The Johannesburg Stock Exchange’s blue-chip Top-40 index and all-share index both closed the day down roughly 1.2%.
The drop might be linked to “both the ongoing banking crisis in the United States and the prospect of possibly lower interest rates following yesterday’s Fed guidance,” according to DailyFX analyst Warren Venketas.
The rand/dollar exchange rate was 18.3350 at 1525 GMT, down 0.3% from the previous market close. Earlier in the day, the rand rose as high as 0.6% as investors resumed their risk-taking behavior in the markets.
With the European Central Bank reducing the pace of its rate hikes and data showing that US unit labor costs (the price of labor per single unit of manufacturing) rose at a 6.3% annual rate in the first quarter, the dollar rallied on Thursday and was last up at 0.267% against six rivals.
The benchmark South African government bond yield for 2030 increased by 1.5 basis points to 10.105%.
