The rand swung between gains and losses against the dollar after the US Federal Reserve cut stimulus while pledging to hold rates near zero. South African bonds gained as Fitch Ratings affirmed the nation’s creditworthiness.
The Fed’s Open Market Committee (FOMC) said it will cut monthly bond and mortgage purchases to $75-billion from $85-billion, citing an improved outlook for the US employment market before jobless claims data on Thursday.
Fitch affirmed South Africa at BBB, the second-lowest investment level, with a stable outlook.
The rand’s "price action will once again most likely be somewhat testing as the markets contemplate the FOMC measures combined with somewhat illiquid markets as we head into the year end," Mohammed Nalla, head of strategic research at Nedbank Group in Johannesburg, said in e-mailed comments.
The rand weakened as much as 0.3% and gained 0.2% before trading little changed from Wednesday’s close at 10.3417 per dollar by 10:09 am in Johannesburg.
Benchmark rand-denominated bonds due December 2026 rose, sending yields down six basis points, or 0.06 percentage point, to 8.17%, the lowest on a closing basis since November 20.
Foreign investors sold a net R499-million of South African bonds and bought R484-million of equities on Wednesday, according to JSE Ltd. data. – Bloomberg