JOHANNESBURG: The South African rand strengthened on Wednesday, with market attention firmly pinned on the US Federal Reserve, which is due to update its policy plan later in the day, likely fleshing out timing on expected rate hikes.

Traders will study the US central bank's statement for further clues on the pace of interest rate hikes, as well as how it will go about slimming down its balance sheet.

At 0635 GMT, the rand traded at 15.2300 against the dollar, around 0.1% stronger than its previous close.

South African rand steady with eyes on central bank meetings

Supporting the rand, the South African Reserve Bank is expected to raise rates on Thursday, its first policy meeting of 2022. Economists polled by Reuters predict a 25-basis-point increase in the repo rate to 4.00% in what would be the second successive increase after one in November.

Other domestic drivers this week could include December producer inflation data also due on Thursday and December budget figures on Friday.

The government's benchmark 2030 bond edged higher in early deals, with the yield falling 2.5 basis points to 9.335%.