JOHANNESBURG (Reuters) -South Africa’s rand strengthened on Wednesday, as investors awaited the outcome of the U.S. Federal Reserve’s policy meeting and potential peace talks between Russia and Ukraine.
At 1555 GMT, the rand traded at 15.0150 against the dollar, 0.55% stronger than its previous close.
But investors were cautious before the U.S. Federal Reserve’s interest rate decision, with the Ukraine war and China’s surging COVID-19 cases as the backdrop.
“The foreign-exchange markets have struggled to establish any meaningful or discernible trend over the course of the most recent sessions,” Nedbank analysts wrote in a note.
“This scenario is undoubtedly attributable to the ongoing global scenarios and the FOMC (Federal Open Market Committee) meeting today.”
The Fed is set to raise rates for the first time since the pandemic, with traders looking for indications about the pace of future rate hikes.
On Russia and Ukraine peace talks, Ukrainian President Volodymyr Zelenskiy said on Wednesday that the talks were sounding more realistic but more time was needed.
In fixed income, the yield on the benchmark 2030 government bond was flat at 9.795%.
Stocks on the Johannesburg Stock Exchange (JSE) soared on Wednesday, with the main indexes posting their biggest single day gain by over 4% last seen in November 2020.
The market primarily surged on the back of a massive gain in index heavyweights Naspers Ltd and its foreign subsidiary Prosus NV, whose shares posted double-digit gains on the back of their biggest investment China’s Tencent Holdings which raced up by 23% on the Hong Kong Stock Exchange.
The JSE was further boosted by a solid surge in bank stocks.
The benchmark all-share index closed up 4.04% at 73,484 points and the blue-chip index of top 40 companies ended up 4.17% at 66,972 points.
Naspers, which holds over 28% in Tencent through subsidiary Prosus, was up 21% after China’s Vice Premier Liu He said Beijing would roll out support for the Chinese economy as well as be cautious with measures for capital markets.
Tencent had been battered in the last few days after a report that Chinese regulators could put a hefty fine on the company for violating central bank regulations on its WeChat Pay mobile network. Prosus was up 21%.
The bank stocks also did well with the bank index ending up 5.1% on stronger local economic prospects.
(Reporting by Olivia Kumwenda-Mtambo and Promit Mukherjee; Editing by Rashmi Aich and Jonathan Oatis)
