JOHANNESBURG (Reuters) – The South African rand held steady in early trade on Tuesday, with investor focus on Wednesday’s U.S. Federal Reserve policy decision which could see it deliver a big interest rate cut.
At 0750 GMT, the rand traded at 17.6250 against the dollar, not far from its Monday closing level of 17.6225.
Markets are certain the Fed will cut rates when it makes its policy announcement on Wednesday and are leaning towards more aggressive easing in the world’s biggest economy.
“Markets have started positioning themselves for a 50bps (basis points) rate cut by the Fed,” said Andre Cilliers, currency strategist at TreasuryONE.
Like other risk-sensitive currencies, the rand often takes cues from global drivers like U.S. monetary policy in addition to domestic factors.
On Wednesday, local investors will look to South Africa’s August consumer inflation figures and on Thursday, the South African Reserve Bank will announce its policy decision.
Economists polled by Reuters predict a 25-basis-point rate cut by the central bank of Africa’s most industrialised economy.
On the stock market, the Top-40 index was up about 0.6% in early trade.
South Africa’s benchmark 2030 government bond was also firmer in early deals, as the yield slipped 2 basis points to 8.805%.
(Reporting by Tannur Anders; Editing by Emelia Sithole-Matarise)
