JOHANNESBURG – South Africa’s rand weakened against the US dollar early on Tuesday, giving back earlier gains as traders booked profits ahead of the US Federal Reserve’s monetary policy meeting.
At 0640 GMT, the rand traded at 16.7740 per dollar, 0.56% weaker than its previous close, and retreating from a near 12-week high of 16.6400 touched earlier in the session.
With no significant data due locally until Thursday, investors’ focus is now on the US central bank’s two-day meeting, starting later in the day, for any forward guidance as the economy gradually starts showing signs of recovery.
“It could very well come down to Wednesday and what the Fed see as a path forward,” said Standard Bank chief trader Warrick Butler in a note.
“More easing in terms of long-term low/zero interest rates and continued support for the economy and this strong support area in the rand of 16.50/65 could well give way and open another floodgate move back to 15.5000.”
In fixed income, the yield on the 10-year government bond was up 2 basis points to 9.030% in early trade.