JOHANNESBURG (Reuters) -South Africa’s rand firmed on Thursday as investors bet on a September interest rate cut in the world’s biggest economy after dovish comments by the U.S. Federal Reserve on Wednesday.
At 1540 GMT, the rand traded at 18.20 against the dollar, about 0.1% stronger than its previous close.
“The rand traded below the R18.20 mark for most of the day, touching the R18.10 handle earlier. Across the board, other EM (emerging market) currencies have also firmed,” said Wichard Cilliers, head of market risk at TreasuryONE.
Fed Chair Jerome Powell said on Wednesday that interest rates could be cut as soon as September if the U.S. economy follows its expected path.
Like other risk-sensitive currencies, the rand often takes cues from global drivers like U.S. monetary policy in addition to local factors.
On the domestic front, South African manufacturing activity rose in July, a Purchasing Managers’ Index (PMI) survey showed on Thursday, as both domestic and global demand picked up.
On the stock market, the Top-40 index closed about 1.25% down.
South Africa’s benchmark 2030 government bond was stronger, with the yield down 6 basis points at 9.345%.
(Reporting by Tannur Anders and Bhargav Acharya in Johannesburg;Editing by Bernadette Baum and Matthew Lewis)
