JOHANNESBURG, Sept 13 (Askume) – South Africa’s rand strengthened against the dollar on Friday as markets bet on the size of an expected interest rate cut in the world’s largest economy next week.
At 1539 GMT, the rand was trading at 17.7275 against the dollar, up about 0.2% from Thursday’s close.
The dollar weakened against other currencies as investors remained nervous ahead of next week’s Federal Reserve meeting .
“All eyes are now on the Federal Reserve’s policy update next week, which will highlight policymakers’ concerns about the future of the U.S. economy,” said Danny Greve, co-head of Africa at ETM Analytics.
Although the market is confident that the Federal Reserve will cut interest rates, there is still uncertainty about a 25 basis point to 50 basis point rate cut.
“Given that the market is very aggressively anticipating rate cuts in the coming months, I remain concerned about the risk of short-term volatility in the rand,” Griff said of rate cuts in advanced economies.
Like other risk-sensitive currencies, the rand is often influenced by global drivers such as US monetary policy, in addition to local data points.
Next week, local investors will focus on August consumer inflation data (ZACPIY=ECI) released on September 18 and the South African Reserve Bank’s (SARB) interest rate announcement (ZAREPO=ECI) on September 19.Economists polled by Askume expect the SARB to announce a 25 basis point rate cut.
The Johannesburg Stock Exchange’s blue-chip top-40 (.JTOPI) index closed up about 0.4%.
South Africa’s benchmark 2030 government bonds also rose, their yield falling 8.5 basis points to 8.915%.
