Rand Crumbles Under Hawkish Fed Signals

The South African rand gave back its gains from last week in early trade on Monday, falling to 16.1225 per US dollar as the greenback firmed up.

This comes after a more hawkish tone from the US Federal Reserve at the Jackson Hole gathering, which led traders to raise their expectations for another US rate hike.

A stronger dollar tends to weigh on dollar-priced metals, and that's a problem for South Africa: gold and platinum are major exports that bring in hard currency.

The combination of weaker metal prices and higher oil prices is close to a 'worst-case scenario' for South Africa's terms of trade, according to ETM Analytics.