South Africa’s rand rides on euro gains versus dollar

JOHANNESBURG (Reuters) – South Africa’s rand steadied versus the dollar after pushing firmer than the 12.00 mark overnight, helped by a stronger euro after the Federal Reserve signalled last week that U.S. rates would rise very gradually.

A less aggressive than expected policy tightening cycle by the Fed would boost high-yielding emerging currencies such as the rand, even as South Africa’s own central bank is expected to keep its key repo rate unchanged on Thursday.

At 0643 GMT, the rand traded at 11.9200 against the greenback, barely moved from Monday’s New York close at 11.9080.

The dollar was on the defensive against major currencies as investors remained jittery over the timing of interest rate increases in the world’s biggest economy.

“Dollar/rand is just reflecting moves in euro/dollar … the two are moving almost tick for tick, with the euro’s climb above 1.09 yesterday taking dollar/rand through 12.00,” Rand Merchant Bank currency analyst John Cairns said.

In fixed income, the yield on the benchmark 2026 government bond was unchanged at 7.69 percent after debt had climbed to three-week highs on Tuesday, alongside the stronger rand.

Traders and analysts were not expecting any major market moves at Thursday’s domestic rate decision, with all 35 economists polled by Reuters seeing the benchmark repo unchanged at 5.75 percent.