(Reuters) -South Africa’s rand slipped on Wednesday as the dollar remained near the two-decade high touched in the previous session ahead of a U.S. Federal Reserve policy meeting.
At 1522 GMT, the rand traded at 16.0400 against the dollar, 0.03% weaker than its previous close.
The dollar index, which measures the greenback against a basket of six major peers, was trading at around 105.40, after hitting 105.65 on Tuesday, its strongest level since late 2002.
ETM Analytics said in a note that the direction of the dollar and currency markets will depend on tonight’s Fed’s rate decision and the forward guidance provided in the policy statement.
“Looking ahead, we see further downside risks for EM (emerging markets) and frontier market currencies in the near term, especially for those with weak fundamentals, as risks of capital outflows heighten further,” ETM Analytics added.
On the stock market, the Top-40 index grew 2.9% to 61,163 points while the broader all-share rose 2.77% to 67,502 points.
“We’re seeing a modest recovery in equity markets ahead of some key central bank meetings but investors remain wary of what’s to come,” Craig Erlam, senior market analyst at OANDA, said.
Retail stocks were among the gainers, with fashion and food retailer Woolworths up 4.06% and biggest grocery chain Shoprite up 3.94% after retail sales grew 3.4% year-on-year in April after rising by a revised 1.7% in March. The market had expected a 1.6% increase.
The government’s benchmark 2030 bond rose, with the yield down 13.5 basis points to 10.255%.
(Reporting by Bhargav Acharya in Bengaluru, Promit Mukherjee in Johannesburg and Anait Miridzhaniana in Gdansk, Editing by Angus MacSwan)
