US rate hike?

The rand slipped against the dollar yesterday as market attention shifted from concern about a ballooning US trade gap to an unexpected interest rate hike in that country next month.

RMB AM and Business Day report that the rand was R6,04 to the dollar in midafternoon trade, about 10c down on its close in New York on Wednesday.

Traders said lacklustre dollar performance over the past year had left many short of the greenback, and players could take advantage of an unexpected acceleration in the pace of US interest-rate increases this year.

After the yen hit a five-year high against the dollar in December, some traders are betting its ascent of recent months will continue, despite doubts on whether the rally is justified economically, analysts said.

The yen rallied to a five-year high against the dollar in December. If the dollar falls sharply against the yen in the coming days then risks arise for a sudden corrective move the other way.