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#RandReport: Rand falls before Fed meeting outcome, stocks rise

At 1501 GMT, the rand was R12.7100 per dollar, 0.45% weaker than its close of on Tuesday. The currency had fallen to a session low of R12.7175/dollar.

Picture: Supplied.

JOHANNESBURG - South Africa’s rand fell to a new 4-1/2 month low against the dollar in afternoon trade on Wednesday, as investors waited cautiously for the outcome of a United States Federal Reserve policy meeting later in the day.

At 1501 GMT, the rand was R12.7100 per dollar, 0.45% weaker than its close of on Tuesday. The currency had fallen to a session low of R12.7175/dollar, its weakest level since 22 December, according to Thomson Reuters data.

Traders said market focus was on the outcome of the Fed policy meeting at which policymakers may outline the future path for interest rates.

As central banks in some advanced economies move away from the era of historically low-interest rates, emerging markets that have wide current account deficits to fund are expected to be hit the hardest as the supply of liquidity tightens globally.

The currency has lost 6% against the dollar since the beginning of April, as a soaring dollar pulls emerging market currencies lower.

“Long-term seasonality trends suggest that the rand will likely remain under pressure in May, and then recover in the following months,” Nedbank analysts Reezwana Sumad and Walter De Wet wrote in a report.

“The South African Reserve Bank (interest rates) decision later in the month, followed by credit ratings reviews, is likely to lend some volatility to the local FX markets.”

Earlier in the session, the rand got support from data showing manufacturing activity improved in April after falling sharply in March, pointing to a pickup in business confidence.

In fixed income, the yield for the benchmark government bond jumped 13 basis points to 8.32%, reflecting weaker bond prices.

On the bourse, the benchmark Top-40 index gained 0.33% to 51,571 points, while the All-Share index rose 0.4% to 58,466 points.

Gold and platinum miners buoyed the market, with the bullion sector up 4.54%, after they steadied on Wednesday from a four-month low hit in the previous session.

Gold Fields rose 5.80% to R49.59 and AngloGold Ashanti was up 4.38% to R117.27.

“It’s a cautious environment currently, with investors not taking any large positions,” said FFO Securities portfolio manager Wilmar Buys

One of the biggest gainers was Astral Foods, up 6.08% at R3.26, after it flagged a more than fivefold jump in half-year earnings.