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Rand steadies, investors eye US Federal Reserve policy meeting

Caution prevailed among investors as Eskom said it would continue implementing power cuts on a rotational basis as it struggles with generating capacity shortages.

FILE: Picture: Christa Eybers/EWN.

JOHANNESBURG - The rand steadied on Tuesday as the prospect of rolling blackouts and downbeat economic data offset expectations that a dovish tone at this week’s US Federal Reserve policy meeting could lift emerging-market assets.

At 16:37 GMT, the rand traded at 14.4425 per dollar, 0.02% weaker than its New York close on Monday.

The Fed’s two-day meeting starts later on Tuesday. Money markets are pricing in a 99% probability of US borrowing costs not being altered on Wednesday.

“A dovish Fed will trigger a risk-on rally for risk assets. But the rand’s gains will be curbed by rolling blackouts and sales data that is likely to disappoint,” RMB analyst Mpho Tsebe said in a note.

Caution prevailed among investors as Eskom said it would continue implementing power cuts on a rotational basis as it struggles with generating capacity shortages.

Analysts say power cuts, which have happened in several rounds since June 2018, are one of the reasons why business confidence has slumped in recent months.

Statistics South Africa is scheduled to publish February consumer price inflation figures and January retail sales data on Wednesday.

In fixed income, the yield on the benchmark government bond due in 2026 rose 6.5 basis points to 8.76%.

Stocks meanwhile rose, with the Johannesburg All-Share index up 0.14% to 56,849 points, while the Top-40 Index firmed 0.17% to 50,475 points.

Commodity stocks lead the bourse higher as palladium surged past $1,600 for the first time on Tuesday on expectations that an already strained supply scenario for the autocatalyst metal could worsen, while platinum soared three percent.

Gold also joined other precious metals to benefit from a weaker dollar going into the Fed meeting.

Sibanye-Stillwater jumped 8.45% to R16.56, Lonmin Plc climbed 4.85%, and Impala Platinum rose 2.56% to R67.22.