South Africa's rand pauses rally, stocks slip as investors eye Fed
Rand pauses ahead of Fed, scope for further gains
Stocks slip as investors await news
Adds latest prices, analyst quotes
JOHANNESBURG, June 19 (Reuters) - South Africa's rand dipped in late trade on Wednesday as investors took profits from a strong rally in the previous session ahead of a closely-watched policy decision by the U.S. Federal Reserve.
At 1520 GMT the rand ZAR=D3 was 0.12% weaker at 14.5250 per dollar after a close of 14.5075 overnight, losing some momentum after posting a two-week high of 14.4700 earlier in the day.
A pledge by President Cyril Ramaphosa on Tuesday to give more support to cash-strapped power utility Eskom, combined with an increasingly dovish outlook from U.S. and Eurozone central banks saw the rand gain by its most in a single session since Jan. 4.
Ramaphosa is likely to give details of the Eskom support in his state of the nation address on Thursday as pressure mounts on him to deliver on his election pledge to jump-start flagging growth and avoid losing the country's investment-grade credit rating.
Investor hopes that the U.S. Federal Reserve will soon cut rates and subdued inflation data at home are set to keep demand for the rand healthy.
"Should a 25bp cut materialise in the U.S. fed funds rate tonight, the rand would have substantial scope for imminent strength," said Annabel Bishop, chief economist at Investec.
"A less dovish view than the markets anticipate could, instead, see renewed rand weakness," Bishop added in a note.
Bonds were firmer, with the yield on the benchmark paper due in 2026 ZAR186= falling 7 basis points to 8.18%, its best since April 2018.
Stocks ended weaker, with the benchmark Johannesburg Stock Exchange's (JSE) Top-40 Index .JTOPI down 0.11% to 52,534 points while the broader All-Share Index .JALSH closed 0.13% lower at 58,553.
"I think the buying slowed down a little because people are going: 'Alright, we've done our buying that we need to do, let's wait for the Fed before we continue with buying the local equities,'" said Cratos Capital equities trader Greg Davies.
Tobacco company British American Tobacco BTIJ.J was one of the blue-chip index's worst performers, falling 2.14% while retail company Mr Price MRPJ.J dropped 1.79%.
Scandal-hit Steinhoff SNHJ.J saw its locally-listed shares slide nearly 9% after the firm reported a 1.2 billion euro ($1.3 billion) annual loss and warned that the massive accounting scandal it faces would likely cause further damage to operations.
(Reporting by Mfuneko Toyana and Naledi Mashishi, editing by Deepa Babington)
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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