As the dollar declines, the South African rand rises.

Estimated read time 2 min read

As the US dollar weakened on international markets on Wednesday afternoon, the South African rand appreciated.

The rand was up 0.5% from its previous finish at 18.5600 against the dollar ZAR=D3 at 1605 GMT.In relation to a basket of other currencies, the dollar index =USD fell by roughly 0.1% as speculators wrote off higher-than-expected U.S. inflation and continued to project a June interest rate cut from the Federal Reserve.

There was no significant economic data from South Africa released on Wednesday. However, the publication of the January output numbers for mining (ZAMNG=ECI) and manufacturing (ZAMAN=ECI) on Thursday could function as a local catalyst for the currency.

The Top-40 index on the Johannesburg Stock Exchange.JTOPI finished 1.15% higher.

The benchmark 2030 government bond for South Africa, ZAR2030=, has a lower yield of 10.210%, up 4.5 basis points.

The terms “weak dollar” and “strong dollar” are used to describe the current value of U.S. currency in comparison to other major currencies.

The values of about 170 currencies fluctuate constantly in the foreign exchange, or Forex, markets. However, just four currencies are used as benchmarks and they are routinely compared to each other as a measure of relative strength or weakness. They are the British pound, the Japanese yen, the euro, and the U.S. dollar.

In terms of its impact, a strong dollar means that goods exported by the U.S. are relatively pricier for foreign customers to buy, while imports to the U.S. are relatively cheap. A weak dollar means American consumers must spend more dollars to buy the same imported goods but are a relative bargain abroad.

The U.S. dollar is considered strong or weak in comparison to the values of other major currencies.
A strong dollar means U.S. exports cost more in foreign markets.
A weak dollar means imports are costlier for American consumers to buy.
The value of the U.S. dollar fluctuates constantly in response to market demand.

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