The rand was slightly firmer on Thursday morning, as investors awaited the SA Reserve Bank monetary policy committee’s (MPC’s) decision later in the afternoon.
The MPC is widely expected to keep the repo rate steady at 8.25%.
“For now rates are expected to remain on hold but market participants will be looking to the governor for direction and their thinking around interest rates,” RMB head of forex execution Matete Thulare said.
The local currency fell more than 1% in the previous session as investors worried about the possible geopolitical tension between the US and China, after US President Joe Biden said he was considering the most severe trade restrictions available if companies continued to ship advanced semiconductor technology to China.
“Ahead of the SARB’s interest rate decision later, we expect the rand to consolidate and keep to the R18.10/$ to R18.30/$ trading range for now,” said Thulare. “While below R18.35/$, we still look for another test of R17.90.”
At 10.53am, the rand had strengthened 0.13% to R18.1743/$, 0.1% to R19.867/€ and 0.19% to R23.5968/£. The euro was little changed at $1.0931.
“Despite the cautious mood [due to geopolitical concerns], the dollar fell from Wednesday’s highs on the back of the increasing interest rate cut hopes by the Reserve Bank and rumours of Bank of Japan intervention,” TreasuryOne currency strategist Andre Cilliers said.
At 10.50am, the JSE all share had gained 0.37% to 80,754.09 points and the top 40 was down 0.43%. Banks had added 0.57%, financials 0.52%, precious metals 0.51%, SA listed property 0.41%, industrial metals 0.36%, resources 0.25% and industrials 0.23%.
At the same time in Europe, the FTSE 100 had gained 0.78% and France’s CAC 40 0.53%.
Earlier in Asia, the Shanghai Composite was up 0.48% and Hong Kong’s Hang Seng 0.33%, while Japan’s Nikkei fell 2.36%.
In the commodities market, gold gained 0.31% to $2,465.7/oz and platinum 1.16% to $1,003.50/oz. Brent crude was 0.21% weaker at $84.95 a barrel.
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