JOHANNESBURG – South Africa’s rand traded firm early Wednesday, as expectations that the U.S. Federal Reserve will signal a slower place of monetary tightening later in the day kept the dollar weak.
At 0555 GMT, the rand traded at 14.3000 versus the dollar, 0.5 percent stronger than its previous close.
With little domestic data and tepid market activity, the South African currency is expected to track global trends this week.
The dollar index was down 0.25 percent at 96.86, hovering near a one-week low as it extended losses into the second day. The Fed speculation and global growth anxiety have sent U.S. bond yields down and put further pressure on the dollar. The rand’s gains on Tuesday were also linked to dollar weakness, as traders wagered that the Fed would hit the pause button on its tightening cycle after an expected rate hike this week. [nL8N1YN3WA] [nL3N1YO1NG]
“Sentiment and politics will continue to be the key drivers,” said Bianca Botes, corporate treasury manager at Peregrine Treasury Solutions, predicting the rand would trade in a range of 14.22 to 14.48 to the dollar on Wednesday.
Government bonds barely budged in early deals, with the yield on the benchmark instrument due in 2026 down 1 basis point to 9.105 percent. (Reuters)