JOHANNESBURG (Reuters) -South Africa’s rand strengthened against a weaker dollar on Thursday after the U.S. Federal Reserve signalled that it would pause its interest rate hiking path.
The Fed on Wednesday raised interest rates by a widely expected 25 basis points (bps), but dropped language about “ongoing increases” being needed in favour of “some additional” rises, as it watches how wobbling confidence in banks affects the economy.
At 1546 GMT, the rand traded at 18.0325 against the dollar, 1.52% stronger than its previous close.
The dollar index, which measures the currency against six rivals, fell more than 0.3% to 102.12.
“The world has been so dominated by dollar strength over many, many years… I think we may be in for a sustained period of relative dollar weakness”, said Wayne McCurrie, portfolio manager with FNB.
Headline inflation in South Africa rose slightly in February to 7% from 6.9% in January, data showed on Wednesday, fuelling bets that the South African Reserve Bank (SARB) would hike interest rates by 25 bps at its meeting next week.
Stocks on the JSE closed slightly higher, with both the blue-chip Top 40 and its broader all-share index ending the day up more than 0.4%.
The government’s benchmark 2030 bond was stronger, with the yield down 4.5 bps to 9.950%.
(Reporting by Bhargav Acharya and Tannur Anders; Editing by Sonia Cheema, Anait Miridzhanian)
