Johannesburg - The rand shook-off power supply concerns and broad emerging market weakness to trade over half a percent firmer against the dollar on Wednesday, as traders anticipating a delay in a US rate hike boosted the local unit.
By 1530 GMT the rand had clawed back 0.63 percent to 11.5125 per dollar, after tumbling to its weakest in four sessions on Tuesday following state utility Eskom's extension of rolling electricity blackouts.
The rand out-paced the currencies of its emerging market peers, whose commodity-linked economies were forced on the ropes by the falling oil price.
The falling price of crude, which dipped below $49.40 a barrel in the session, fuelled growing bets that a US Federal Reserve fretting over the deflationary effects of a super-low oil price would delay an interest rate hike.
“We're seeing a bit of a risk-on in terms of currencies and a reversal of fortunes for the rand,” said Richard Faber, a trader at Citibank.
“There may be a bit of unwinding of positions going into the FOMC (Federal Open Market Committee) meeting with some guys anticipating that they are a touch more dovish than they have been in the past,” Faber added.
Government bonds tracked the firmer rand, with the yield on the paper due in 2026 falling to 7.1 percent, a fresh 20-month low.
South Africa's central bank concludes its monetary [policy meeting on Thursday, and is expected to hold the main lending rate at 5.75 percent as inflation continues to trend below the bank's upper limit of 6 percent.
Reuters