Rand lifted by dovish Fed

The rand firmed against a softer dollar yesterday, in line with emerging markets and a fall in bond yields, as dovish comments from US Federal Reserve chairperson Jerome Powell boosted demand for riskier assets.

Stocks were weighed down by market heavyweight Naspers and losses in so-called rand hedges – dual-listed shares that normally benefit when the rand weakens.

The rand touched an intraday best of 13.6100.

“The rand’s robust performance has a lot to do with what the Fed chairman said yesterday in regards to the hiking cycle, which opened the door for risk sentiment, as the stance was less hawkish,” said ETM economist Halen Bothma.

Comments from Powell that US interest rates were “just below” neutral put the dollar on the back foot.

The rand hit near four-month highs, shrugging off data showing that credit demand growth had slowed in October.

“The rand has gained most of its ground it lost in August and could see further gains. However, it will depend on the G20 meeting and local data,” said Bothma.

The market is closely watching a meeting between US President Donald Trump and Chinese leader Xi Jinping at the G20 summit tomorrow. – Reuters