JOHANNESBURG (Reuters) -The South African rand strengthened slightly on Wednesday as investors awaited the minutes of the U.S. central bank’s last monetary policy meeting due later in the day.
At 1503 GMT, the rand traded at 14.6510 against the dollar, 0.13% stronger than its previous close, after a choppy day’s trading.
Hawkish comments from U.S. Federal Reserve officials had bolstered the dollar on Tuesday, pushing it to its highest level in nearly two years.
However, the dollar was flat to slightly higher on Wednesday ahead of the minutes’ release.
Higher rates in developed markets tend to drain capital from higher-yielding but riskier emerging markets such as South Africa, but relatively elevated commodity prices since Russia’s invasion of Ukraine have supported the rand.
Gold prices were higher on Wednesday with spot gold last up 0.2% at $1,928.00 per ounce, although platinum fell as much as 1.84% and palladium 2.89% and both have retreated from early March highs. All three metals are exported by South Africa.[GOL/]
If the conflict in Ukraine calms down, commodity prices are likely to fall further and weaken the rand, along with other emerging market “commodity currencies” like the Brazilian real and Colombia peso, Annabel Bishop of Investec said in a note.
“The rand should average R15.25 (to the dollar) for the second half of the year, although it is likely to remain at risk of some volatility, but not as marked as in some years’ moves,” she said.
Government bonds were almost unchanged, with the yield on the benchmark 2030 maturity falling 1 basis point to 9.585%.
The Johannesburg Stock Exchange’s all-share index fell 1.39% to 74,241, while the top 40 blue-chip index closed down 1.69% at 67,191.
The falls were led by technology investor Naspers, which dropped 6.34% and Prosus, its Amsterdam- and JSE-listed subsidiary, which fell 6.09%. They jointly account for over 7% of the benchmark index, strongly impacting its moves.
Naspers is the top investor in Chinese tech giant Tencent, holding up to 28.8% in Tencent through Prosus. Tencent shares fell 2.31% in Hong Kong.
(Reporting by Olivia Kumwenda-Mtambo and Rachel Savage; Editing by Subhranshu Sahu and Emelia Sithole-Matarise)
