JOHANNESBURG: South Africa's rand steadied against the dollar in late trade on Wednesday, as investors awaited a lik
JOHANNESBURG: South Africa's rand steadied against the dollar in late trade on Wednesday, as investors awaited a likely cut in interest rates by the US Federal Reserve, shifting the spotlight away from domestic economic troubles.
Stocks fell as a weaker-than-expected performance by AngloGold Ashanti put pressure on gold shares, wiping out any benefit from stronger prices for the precious metal.
At 1510 GMT, the rand was trading at 14.1800, not far off a close of 14.2050 on Tuesday.
The US Federal Reserve is expected to cut interest rates for the first time in more than a decade. The policy announcement is scheduled to be released at 1800 GMT.
Investors will focus on whether the Fed leaves the door open for further easing.
"The tone of the statement will be under much scrutiny for guidance on what to expect next," RMB analysts Siobhan Redford and Kate Rushton said in a note.
"While today may mark the end of the "waiting" for the Fed's July announcement, the likelihood that it will emphasise that future decisions will be data-dependent will leave markets scrutinising all new data as it comes out."
The South African currency has largely ignored local economic problems, such as weak unemployment figures and financial troubles at power utility Eskom.
Eskom said on Tuesday it expected a loss of around 20 billion rand ($1.4 billion) this financial year. Lack of improvement in its financial position indicated it would be unable to meet its obligations without government help.
"There are many in the market questioning why the rand is not blowing off more than it has. Eskom is producing major losses, there are bailouts galore, and the budget deficit is blowing out to 6% or more," ETM Analytics said in a note.
On Tuesday, data showed unemployment rose to an 11-year high in the second quarter, underscoring the country's fragile growth outlook. But early on Wednesday markets were looking ahead to the Fed rate decision later in the session.
The Johannesburg Stock Exchange's broader all-share index declined 0.8% to 56,784 points, while blue-chip firms on the top-40 index fell 0.8% to 50,799 points.
AngloGold led the declines on the blue-chip index, shedding 5.37% to 255 rand, while Gold Fields also slipped 4.53% to 76 rand and Anglo American Platinum lost 1.78% to 352 rand.
"AngloGold came out with a trading statement, which was below expectation, which has obviously put pressure on the whole gold sector, driving all of them down ... even with the weaker rand and the stronger gold," said Mike Westerhos, an equity trader at AG Capital.
Yields on the benchmark 10-year bond added 1.5 basis points to 8.325%.