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The South African rand strengthened in early trading on Thursday, supported by stable commodity prices as investors assessed the U.S. Federal Reserve’s decision to raise interest rates and signal that further monetary tightening could follow.
At 0807 GMT, the rand traded at 16.3050 against the dollar, about 0.6% stronger than its previous close.
The U.S. dollar was flat against a basket of currencies.
South Africa’s key export commodities also gained, with gold rising 1.2% to $4,314.64 per ounce and platinum climbing 1.9% to $1,784.42 as investors weighed the Fed’s move.
The Fed raised interest rates by 25 basis points and signalled further hikes, as policymakers warned that inflation could worsen.
“The South African Reserve Bank faces a difficult balance. Maintaining credible inflation control could support the ZAR’s yield appeal, while mechanically matching overseas increases would risk adding pressure to already subdued domestic activity,” said ETM Analytics in a note.
South Africa’s Monetary Policy Committee is due to meet next week to decide on the country’s interest rate path.
On the Johannesburg Stock Exchange, the Top-40 index was up 0.6% in early trade.
South Africa’s benchmark 2035 government bond was also slightly firmer in early deals, with the yield falling 3 basis points to 8.71%.
