Rand inches ahead as political worries stall major currencies
JOHANNESBURG – South Africa’s rand inched higher early on Tuesday, adding to the previous session’s gains, with focus on political uncertainty in Britain and the United States trumping local concerns in a search for yield.
At 0640 GMT, the rand traded 0.16 percent firmer at 12.8000 per dollar compared to close of 12.8200 overnight in New York.
The rand has gained around 1.2 percent since Moody’s downgraded the country’s credit by one notch on Friday with a negative outlook, but leaving it the only major agency to rate South Africa as investment grade.
Last Thursday’s shock election result in Britain which left Prime Minister Theresa May short of a parliamentary majority has sent jitters through developed markets. A probe into firing of FBI head also stymieing dollar progress.
The focus shifts to the meeting of U.S. Federal Reserve. The bank is widely expected to raise interest rates, with investors looking for fresh hints on the pace of tightening in coming months.
South African bonds were flat, with the yield on benchmark 2026 government bond unchanged at 8.48 percent.