South African rand opens slightly firmer; eyes on Fed minutes

JOHANNESBURG: South Africa's rand opened slightly firmer against the dollar on Wednesday, with market attention pinned on the release of minutes from the US Federal Reserve later in the day.

At 0710 GMT, the rand traded at 14.3625 against the dollar, 0.1% stronger than its previous close.

Investors will scrutinise the Fed minutes for further clues to when US interest rates might rise. Any sign they will rise soon tends to hurt emerging market currencies like the rand. South Africa's net foreign reserves dipped to $51.368 billion in June, central bank data showed on Wednesday, but that did little to sway the local currency.

South Africa's rand rises as dollar slips

Elsewhere, research firm NKC African Economics said it had raised its 2021 economic growth forecast for South Africa to 4.3% on the back of increased activity and mobility in recent months.

"The rise in global demand and bounce-back in commodity price levels will support South Africa's industrial sector growth. And excess savings among middle- and high-income groups have and will support consumer spending in the coming months," NKC said in a note. It cautioned that the economic recovery from the COVID-19 pandemic would be a lengthy one, however, following a steep contraction of 7% last year.

On the Johannesburg Stock Exchange, the Top-40 index was 0.6% stronger in early trade. Government bonds were little changed, with the yield on the 2030 instrument at 8.92%.