South Africa's rand firms as focus turns to Fed meeting
- The rand had earlier in the session struggled to make meaningful gains as scheduled power outages by state utility Eskom dragged into their sixth day and weighed on sentiment.
- Eskom said on Monday that it aimed to get its power plant performance to "acceptable levels" by late 2021.
JOHANNESBURG: South Africa's rand firmed in afternoon trade on Monday as US Treasury yields backed off recent highs, supporting a risk-on backdrop, with investors awaiting further policy cues from the Federal Reserve's policy meeting this week.
At 1505 GMT, the rand traded at 14.9100 versus the dollar, 0.38% firmer than its previous close.
The rand had earlier in the session struggled to make meaningful gains as scheduled power outages by state utility Eskom dragged into their sixth day and weighed on sentiment.
Recurring power cuts are among the biggest obstacles to economic growth in Africa's most industrialised nation, with 2020 having seen a record level of such outages according to a report published last week.
Eskom said on Monday that it aimed to get its power plant performance to "acceptable levels" by late 2021.
Investors are now awaiting a two-day US Federal Reserve meeting this week for policymakers' remarks on a recent spike in bond yields, fears about rising inflation and the economic outlook.
"With external factors remaining the key drivers of rand movements, we expect that the (Federal Reserve) will reaffirm its extremely dovish stance, despite large upward revisions to its GDP growth and inflation forecasts for this year," analysts at NKC African Economics wrote in a note.
The Bank of England and Bank of Japan are also set to meet this week and will likely set the tone as to where global rates are headed.
The stock exchange in Johannesburg extended its losses on Monday as inflation worries pulled down local economy-sensitive stocks such as banks and concerns around Chinese growth prospects hurt mining and tech companies.
The benchmark all-share index closed down 0.94% to 67,566 points while the bluechip top 4 companies' index slipped 1.07% to 61,921 points. The drop seen in he last two consecutive days has wiped off almost all gains seen since March beginning.
Government bonds firmed, as the yield on the 2030 bond dropped 6.5 basis points to 9.27%.
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