The South African (SA) Rand strengthened in early trading on Thursday, supported by stable commodity prices after the United States (US) Federal Reserve raised interest rates and signalled that further monetary tightening may follow.
The Rand traded at 16.3050 against the Dollar, about 0.6% stronger than its previous close.
The US Dollar was flat against a basket of currencies.
SA’s key export commodities gained, with gold rising 1.2% to $4,314.64 per ounce and platinum climbing 1.9% to $1,784.42 as investors assessed the Federals’s move.
The Fed raised rates by 25 basis points and signalled more hikes, as policymakers warned that inflation could worsen.
“The SA Reserve Bank faces a difficult balance. Maintaining credible inflation control could support the Rand’s yield appeal, while mechanically matching overseas increases would risk adding pressure to already subdued domestic activity,” said ETM Analytics in a note.
SA’s monetary policy committee is due to meet next week to decide on the country’s interest rate path.
On the Johannesburg Stock Exchange, the Top-40 index was up 0.6% in early trade.
SA’s benchmark 2035 government bond was slightly firmer in early deals, as the yield fell 3 basis points to 8.71%.
–Reuters–
