South Africa's rand steadies, holds gains made on tame US inflation

JOHANNESBURG: South Africa's rand steadied in early trade on Thursday, holding on to gains made in the previous session after tame US inflation eased fears that the Federal Reserve could tighten monetary policy sooner than expected.

At 0615 GMT, the rand traded largely flat at 14.6600 against the dollar.

South African rand stronger after U.S. jobs data, markets fall

The rand had started the week on a weaker footing amid growing anticipation the US Federal Reserve could soon start tapering its monetary stimulus, a sentiment bolstered by statements from Fed officials and strong US jobs data.

But US consumer inflation cooled in July, tempering those bets and causing the dollar to retreat.

Riskier currencies such as the rand thrive on US interest rates staying low because they benefit from the rate differential that increases their appeal for so-called carry trade, in which investors borrow in a low-yielding currency to invest in higher-yielding assets.

Government bonds firmed in early deals, with the yield on the benchmark 2030 instrument dropping 3.5 basis points to 8.93%.