The South African rand strengthened in early trading on Wednesday as investors positioned themselves ahead of the U.S.
Federal Reserve’s interest rate decision and signs of easing tensions between the United States and China, Reuters reported.
At 06:38 GMT, the rand traded at 17.1350 to the U.S. dollar, gaining about 0.1% from its Tuesday close.
“The ZAR put in a strong performance from yesterday afternoon. It is higher against all the majors, even with the gold price staying below $4,000.00. The main reason is that the U.S. are almost certain to cut rates tonight,” said Adam Phillips, treasury specialist at Umkhulu Treasury.
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Economists widely expect the Federal Reserve to lower interest rates by 25 basis points at its meeting later tonight.
Phillips added that traders are also watching for the outcome of U.S. President Donald Trump’s meeting with Chinese President Xi Jinping tomorrow, which could further influence global market sentiment.
Locally, market participants turned their attention to new data on money supply and private sector credit, both released at 06:00 GMT. Meanwhile, South Africa’s benchmark 2035 government bond firmed in early trading, with the yield dipping 1.5 basis points to 8.87%.
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Image Credit: Britannica
