The rand gained slightly against the dollar on Wednesday and was seen keeping its firmer tone ahead of an interest rate decision on Thursday, while stock futures were up in line with global markets.
The central bank meeting starts on Wednesday and Governor Tito Mboweni will announce its decision at about 1pm GMT on Thursday.
The rand was trading at 9,99 to the dollar, about 0,4% firmer than Tuesday’s New York close of 10,0325.
”It is firmer in line with other emerging markets. [US stocks] rose and the market has been [volatile]: one day running from risk and the next coming back to risky assets,” said a dealer in Johannesburg.
”The [central bank] meeting starts today and we are looking for a retest of 9,85-9,90/dollar and 9,80 being the pivotal level. The rate cut is seen as positive in this deflation environment.”
South Africa stocks were expected to open positive, after United States and Asian stocks rose overnight. The blue chip Top-40 March futures contract was up 1,78% ahead of the start of trade at 7am GMT.
South African government bonds were slightly firmer. The yield on the 2015 issue was down 4,5 basis points to 7,425% and that on the 2036 paper fell by three basis points to 7,605%.
A Reuters poll last week found 16 economists expect a 100 basis point cut and 11 see a half percentage point fall.
Offical data showed on Tuesday that under a new basket that the central bank will use for monetary policy, inflation was 7,7% from January to December, compared to 8,6% in the previous index.
Other data showed vehicle sales fell by their biggest margin in 24 years in January, and analysts said this should add to the argument for a 100 basis point rate cut, instead of the usual 50 basis points. – Reuters