JOHANNESBURG – The rand held steady in early trade on Wednesday as the dollar hovered near a three-week low after US Federal Reserve Chairman Jerome Powell reiterated that the central bank would be patient in raising interest rates.
At 0625 GMT, the rand traded at R13.8325 per dollar, not far off its overnight close of R13.8400.
“The rand has, along with emerging markets, held steady on Powell indicating that due to uneven global growth dynamics, the FOMC would be patient with respect to interest rate adjustments; more testimony is to follow today,” Nedbank analysts said in a note.
“The rand has thus far failed to breach below the R13.80 level, but has similarly resisted the top at R14.0000, although a test to the downside appears likely against the current backdrop.”
The rand has traded below the psychologically significant R14.00 per dollar level for the past few sessions as last Wednesday’s budget lowered market bets of a credit rating cut by Moody’s after a week of power cuts by utility Eskom had spooked investors.
In fixed income, the yield on the benchmark government bond due in 2026 was down 4.5 basis points at 8.605% in early trade.