South Africa’s rand weakened early Thursday as investors awaited the South African Reserve Bank’s (SARB) interest rate decision.
By 07:15 GMT, the rand was trading at 18.1750 per dollar, down about 0.3% from its previous close. Meanwhile, the dollar edged up 0.2% against a basket of currencies following the U.S. Federal Reserve’s decision to keep interest rates unchanged and lower its growth forecast on Wednesday.
The risk-sensitive rand has been under pressure due to a national budget deadlock, strained relations with the U.S., and uncertainty surrounding tariffs imposed by President Donald Trump. However, market attention remains on the SARB’s rate announcement later in the day, as investors look for signals about the health of Africa’s most industrialised economy.
A Reuters poll of economists suggests the central bank is likely to keep rates unchanged, citing significant economic risks. However, some analysts argue that a rate cut could help strengthen the rand and improve sentiment, especially after inflation data released on Wednesday came in lower than expected.
“After the difficulties in presenting the budget, a cut in the key interest rate would be a positive signal to the economy that the structural reforms undertaken so far are taking effect,” Commerzbank analyst Volkmar Baur said in a research note.
On the stock market, the Top-40 Index (.JTOPI) was down about 0.2% in early trading.
Meanwhile, South Africa’s benchmark 2030 government bond showed slight gains, with the yield falling by 1 basis point to 9.075%.
