South Africa rand hits near 19-mth high as Fed signals gradual tightening

JOHANNESBURG (Capital Markets in Africa) – South Africa’s rand hovered near a 19-month high against the dollar early on Thursday after the U.S. Federal Reserve raised interest rates on Wednesday, but signalled a gradual pace of rate hikes for the rest of the year.

At 0646 GMT, the rand traded at 12.8125 per dollar, flat from its New York close on Thursday, after rallying to 12.77 late on Wednesday in the wake of the Fed’s press conference.

After increasing the interest rate, the Fed stuck to its projections of three total rate hikes in 2017, instead of four, as was expected by many.

“The rand has shifted to the stronger end of its range following the dovish Fed hike, but does not look like it can break stronger,” RMB Global Markets analyst John Cairns said in a note.

Stocks were opened firmer, with the JSE securities exchange’s benchmark Top-40 index up 1 percent at 45,112 points by 0704 GMT.

In fixed income, the yield of the benchmark government bond due in 2026 was down 11 basis points to 8.545 percent.

Source: Reuters Africa News