South African rand strengthens as markets await Fed rate decision

JOHANNESBURG: The South African rand strengthened on Tuesday, as the dollar retreated ahead of the Federal Reserve’s meeting, with investors entertaining the idea the US central bank could shift to a less-aggressive policy narrative.

At 0605 GMT, the rand traded at 18.2700 against the dollar, 0.56% stronger than its previous close. “The market is already priced for a 75bp hike so that decision will not impact market sentiment much,” ETM Analytics said in a research note.

“More important will be the guidance offered by the Fed and whether the pivot to less-aggressive tightening or a pause is indeed in the offing,” it said.

Improved risk sentiment in the market ahead of Fed decision has helped emerging market currencies such as the rand.

The dollar index, which measures the currency against six rivals, was last trading down 0.41% to 111.08.

South African rand weakens as Fed decision looms

The South African government’s benchmark 2030 bond was stronger in early deals, with the yield down 5 basis points to 10.855%.