The USD/ZAR currency pair edged higher on Tuesday, as the Rand eased after recent rally, driven by rising Gold prices, on likely profit taking.
Still, the South African currency was trading not far from a 40 1/2-month high of 16.3025 per US Dollar, which it achieved on January 6th.
The Rand has advanced, as Gold scaled a new all-time high on Monday amid heightened safe-haven demand. South Africa is a major producer and exporter of the yellow metal.
Fresh concerns over the Federal Reserve’s independence and geopolitical tensions have prompted investors to seek safety in precious metals.
Federal Reserve Chair Jerome Powell said over the weekend the US Department of Justice had issued subpoenas to the central bank. Prosecutors also threatened criminal charges related to Powell’s testimony in June last year on a Fed building renovation project.
Powell said this was a “pretext” intended to mount more pressure on the US central bank to cut interest rates.
Meanwhile, unrest in Iran has led to the deaths of hundreds of people, raising fears of potential US intervention.
Market focus now sets on the key US CPI inflation report, due later today, which may provide further clues over the Fed’s monetary easing path.
And, domestically, investors are also keeping track of developments surrounding a potential extension of the US trade preference programme, the African Growth and Opportunity Act. It still remains unclear if South Africa will be excluded, given strained diplomatic relations between Pretoria and Washington.
The USD/ZAR currency pair was last up 0.30% on the day to trade at 16.4300.
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