The rand firmed in early trade on Tuesday, as the dollar hovered above a one-week low due to cooling expectations for a full percentage-point Federal Reserve Bank interest rate hike this month.
At 0701 GMT, the rand traded at R17.06 against the dollar, 0.34% stronger than its previous close.
The dollar index, which measures the US currency against six major peers, fell around 0.2% to 107.14. That was off Monday’s low of 106.88 but also well back from the high of 109.29 hit last week.
However, a material rand recovery appears unlikely until signs emerge that global stagflationary pressures are beginning to ease, ETM Analytics said in a note.
“The ZAR could remain prone to weakening for as long as the Fed’s guidance remains towards significantly tighter rates while other major central banks such as the ECB and BoJ remain hesitant to follow suit due to domestic growth and stability risks,” analysts added.
Johannesburg-listed stocks opened lower, with the Top-40 and the broader all-share indexes down over 0.5%.
The yield on the government’s benchmark 2030 bond was 4 basis points higher in early deals at 11.125%, reflecting a weaker price.