JOHANNESBURG (Reuters) -The South African rand jumped against the dollar on Wednesday, ahead of the U.S. Federal Reserve’s interest rate decision.
At 1535 GMT, the rand traded at 18.3025 against the dollar, about 1.8% stronger than its previous close.
The dollar was last down 0.56% at 102.72.
“The market is holding its breath for the FOMC decision,” said Greg Davies, head of wealth at asset manager Cratos Capital.
Slowing U.S. inflation increased bets that the Fed would skip a rate hike, but uncertainty remained about further rate increases.
The U.S. central bank’s Federal Open Market Committee (FOMC) will announce its decision at 1800 GMT.
“Yesterday saw a moderation in U.S. consumer inflation figures… with markets seeing the outcome supportive of a June US rate hike pause, which supported the rand,” said Investec Chief Economist Annabel Bishop in a research note.
Like most emerging market currencies, the risk-sensitive rand is susceptible to moves in global drivers such as the U.S. monetary policy and the dollar.
Locally, South Africa’s retail sales fell 1.6% in April from a year earlier, government statistics released on Wednesday showed.
Shares on the Johannesburg Stock Exchange closed higher, with the blue-chip Top 40 ending up 0.2% and the broader all-share index rising 0.3%.
South Africa’s benchmark 2030 government bond was marginally stronger, with the yield down 1 basis point at 10.705%.
(Reporting by Tannur Anders and Anait Miridzhanian; Editing by Bhargav Acharya, Varun H K and Barbara Lewis)
