South Africa’s rand weakened against the dollar on Tuesday as appetite for riskier but high yielding assets waned in cautious trade ahead of the U.S. Federal Reserve’s interest rate decision on Wednesday.
Stocks rose to an eight-week high buoyed by stronger prices for platinum and gold, lifting resource stocks.
At 1522 GMT, the rand traded at 14.4050 versus the dollar, 0.31 percent weaker from its New York close on Monday.
Higher U.S. interest rate expectations subdue investors’ appetite for emerging markets assets, which offer higher returns but carry more risk.
“The market is a bit uncertain of what’s going to happen at the FOMC (Federal Open Market Committee) meeting tomorrow and this is generating some volatility on emerging markets,” ETM Analytics market analyst Jana van Deventer said.
“We could see some more rand weakening into tomorrow evening’s rate decision given that market players are expecting the bank to portray a slightly more hawkish stance than what we saw at previous meetings.”
Government bonds firmed, and the yield for the benchmark instrument due in 2026 dipped 0.5 basis points to 8.745 percent.
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| Add caption South African Rand Weakens Ahead Of U.S. Fed Meeting; Stocks Up |
Platinum soared on risk appetite, analysts said.
Anglo American Platinum topped the blue-chip index, rising 5.6 percent to 409 rand, Lonmin added 4.5 percent to 40 rand and Impala Platinum gained 4 percent to 54 rand.
“The platinum sector as a whole has just been lagging, we’ve seen gold run, silver run so we’re seeing some buying coming into the platinum stocks now as well,” said BP Bernstein trader Vasili Tirasis.
Trade was below average with around 236 million shares changing hands, compared with last year’s daily average of 296 million, according to preliminary bourse data. – Reuters
