JOHANNESBURG – The rand firmed against the dollar on Monday ahead of the U.S. Federal Reserve’s interest rate decision, with both the currency and stock markets lifted by higher metals prices.
By 1525 GMT the rand was up 0.34 percent at 13.14 per dollar, extending its gains after Friday’s positive U.S. employment data solidified a view among Wall Street’s top banks that the Fed will hike interest rates this week.
With a Fed rate increase so broadly priced in, investors have moved on to whether the Fed will be able to sustain its pace of hikes and raise rates in June and September.
“The important question therefore is whether the pace of hiking will pick up faster than expected over the coming year or two,” Old Mutual Wealth analysts said in a note.
Global factors, such as commodity prices, and the outlook for American interest rates will drive the rand more than local factors, Old Mutual Wealth’s Mohr and Odendaal said.
“Investor sentiment towards emerging markets continues to improve, as reflected by capital flows into bond and equity markets,” they added.
On the stock market, the benchmark Top-40 index was up 1.2 percent to 44,846 points, while the broader All-share index rose 1.1 percent to 51,855 points.
Diversified miners Anglo American and BHP Billiton were both in demand as copper and base metal prices gained on positive fundamentals and supply disruptions.
Shares in Anglo were up 3.1 percent at 191.30 rand, while BHP Billiton advanced 1.1 percent to 204.81 rand.
Gold Fields was the biggest gainer among the blue-chips, rising 4.3 percent to 39.65 rand.
Government bonds were slightly weaker, with the yield on the 2026 benchmark up half a basis point to 8.665 percent.