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Rand gains as dollar weakens ahead of Fed

Investors are waiting to see if the US Fed reinforces an more upbeat tone that has followed moves in the United States and Europe to reopen economies.

Picture: 123rf

JOHANNESBURG - South Africa’s rand rose against the dollar on Wednesday, as the US currency weakened amid a cautious mood ahead of the US Federal Reserve’s verdict on the health of the economy.

At 1525 GMT the rand was at 16.5800 per dollar, 0.3% firmer than its previous close and trading at its strongest since March 18.

Investors are waiting to see if the US Fed reinforces an more upbeat tone that has followed moves in the United States and Europe to reopen economies.

The US dollar weakened broadly amid speculation that the Fed might take measures to curb a recent steepening of the US yield curve.

The Fed statement is expected at 1800 GMT.

“Any unexpected addition to the Fed’s stimulus programme and a more dovish than expected statement or a less-bearish-than-before outlook on economic recovery prospects would re-ignite the risk-on rally of late,” ETM Analytics said in a note.

The Johannesburg Stock Exchange (JSE) continued its slide on Wednesday in line with global markets which remained cautious ahead of the US Federal Reserve meeting.

Emerging markets also slipped on worries of a surge in coronavirus cases.

The benchmark FTSE/JSE all share index fell 1.49% to end the day at 53,673 points, while the top 40 companies index slid 1.42% to close at 49,205 points.

The market fall was mainly led by its banks, with the banking index down 3.63% at close of trading hours.

In fixed income, the yield on the government issue due in 2030 was up 2.5 basis points to 9.140%.