World Markets

South Africa's rand steadies after hitting 6-month high

Credit: REUTERS/THOMAS WHITE

South Africa's rand was steady in early trading on Friday, after racing to its best in six months overnight after the central bank kept lending rates unchanged and as the dollar fell following downbeat U.S. data.

JOHANNESBURG, Sept 18 (Reuters) - South Africa's rand was steady in early trading on Friday, after racing to its best in six months overnight after the central bank kept lending rates unchanged and as the dollar fell following downbeat U.S. data.

At 0629 GMT, the rand ZAR=D3 traded at 16.1525 per dollar, unchanged from its previous close -- its strongest since March 16, before the imposition of a COVID-19 lockdown.

The South African Reserve Bank (SARB) left its main lending rate unchanged at 3.50% on Thursday, saying risks to economic growth and consumer inflation were balanced.

The U.S. dollar fell overnight as a stream of poor U.S. data cast a shadow over the economic outlook in the world's largest economy. The Federal Reserve said on Thursday it expected the U.S. economy to shrink by far less than previously forecast in 2020 and promised to keep rates ultra-low for a prolonged period.

"The rand continues to test a leg stronger following a dovish Fed, with U.S. jobless claims adding to the rally yesterday afternoon," said Bianca Botes, executive director at Peregrine Treasury Solutions.

"We will keep an eye on the rand to sustain the recent break below R16.25 to confirm another move stronger, opening the door towards the R16.00 mark in the short term."

Government bonds firmed in early trade, with the yield on the benchmark instrument due in 2030 ZAR2030= falling 3 basis points to 9.16%.

(Reporting by Olivia Kumwenda-Mtambo Editing by Tomasz Janowski)

((Olivia.Kumwenda@thomsonreuters.com; +27 10 346 1084;))

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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