Rand gains as Fed hikes interest rate as expected

In early trade the rand was at R16.67 against the dollar, 0.27% stronger than its previous close.
Image: Shutterstock

The rand gained in early trade on Thursday after less hawkish comments by US Federal Reserve Chairman Jerome Powell’s calmed investor worries about the pace of rate hikes.

The rand traded at R16.67 against the dollar, 0.27% stronger than its previous close.

The dollar index, which tracks the greenback against six other major currencies, was last down at 106.3.

The Fed on Wednesday raised the benchmark rate by an as-expected 75 basis points, while noting that although the labour market remained strong, other economic indicators had softened.

“We could be in for some consolidation as the rand has rallied strongly over the last week,” Andre Cilliers, currency strategist at TreasuryONE, said in a research note.

On the local economic data front, Statistics South Africa will release the June producer price index at around 0930 GMT, providing further clues about inflationary pressures in Africa’s most industrialised economy.

The government’s benchmark 2030 bond rose in early deals, with the yield down 8 basis points to 10.580%.

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