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South Africa’s rand held steady in early Thursday trading, as investors weighed the U.S. Federal Reserve’s firm stance on interest rates alongside ongoing tensions in the Middle East, which continue to unsettle global markets.
The rand was traded at 17.01 to the dollar at 06:54 GMT on Thursday, barely moving from its previous close of 16.9975. The movement followed the Fed’s hawkish tone on Wednesday, as rising energy prices linked to the Iran conflict complicated the outlook for inflation.
While the central bank left interest rates unchanged, it cautioned that higher energy costs could drive a more persistent rise in inflation.
As with many risk-sensitive currencies, the rand tends to respond not only to domestic economic signals but also to broader global developments.
“The rand lost around 1.8% yesterday on the back of the stronger Dollar and rising energy cost concerns. The local currency closed at R16.98 and is trading unchanged against the Dollar this morning,” said Wichard Cilliers, head of market risk at TreasuryONE.
Economists also anticipate that South Africa’s central bank will keep its key interest rate unchanged when it announces its policy decision on March 26.
“Monetary policy is likely to remain tighter for longer over the coming months, delaying rate cuts unless energy prices ease substantially,” said ETM Analytics in a research note.
South Africa’s benchmark 2035 government bond was flat in early deals, with the yield at 9.1%.
