UPDATE 1-South Africa's rand steadies as Fed verdict looms, stocks fall

  • Reuters
  • Forex News
UPDATE 1-South Africa's rand steadies as Fed verdict looms, stocks fall
Credit: © Reuters.

(Updates rand , bond prices; adds stocks)

JOHANNESBURG, March 17 (Reuters) - South Africa's rand steadied in late afternoon trade on Wednesday, as markets waited for the conclusion of the U.S. Federal Reserve's two-day policy meeting for its outlook on the economy and interest rates.

At 1500 GMT, the rand ZAR=D3 traded at 14.8950 versus the dollar, not far off its previous close of 14.9050.

"Today's FOMC meeting is perhaps the most crucial in the last six months," RMB analyst Nema Ramkhelawan-Bhana said in a note.

"For markets, the most important outcome relates to the Fed's view on rising treasury yields. It is the uncertainty surrounding these issues that has engendered mixed trade on international markets."

The Fed is expected to announce its decision on interest rates at 1800 GMT. Investors will eye Fed policymakers' remarks on a recent spike in bond yields, fears about rising inflation and the economic outlook.

Riskier currencies, such as those of emerging markets, thrive on U.S. interest rates remaining low because they benefit from the interest rate differential that increases their appeal for carry trade.

The rand did not react much to data showing retail sales ZARET=ECI fell 3.5% at the start of the year. sales, one of the main drivers of economic growth in South Africa, were last in positive territory in annual terms in March 2020, after which they collapsed when the government imposed a strict lockdown to contain the coronavirus.

On the bourse, stocks extended losses on Wednesday along with other emerging market peers as investors awaited signals on policy tightening from the Fed. on the Johannesburg Stock Exchange fell for a fourth consecutive session with the benchmark all-share index .JALSH closing 1.18% lower at 66,494 points and the blue-chip top 40 index .JTOPI ended 1.32% weaker at 60,810 points.

Further losses were seen from the bullion index .JGLDX which fell 2.39% as gold prices inched lower. miner Gold Fields GFIJ.J ended the day 1.26% lower, while AngloGold Ashanti ANGJ.J closed down 3.61%.

South Africa's government bonds weakened, with the yield on the benchmark 2030 instrument ZAR2030= rising 17.5 basis points at 9.37%.

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