Johannesburg - The rand steadied against the dollar early on Wednesday, trading at mid-October levels while investors waited for a Federal Reserve interest rate decision to set the tone for the rest of the week.
South Africa's currency was at 9.8825 to the dollar at 08:37 SA time, not far off a 9.8945 close in New York on Tuesday.
The local unit, last at these levels against the dollar on October 16, is under pressure as the US currency enjoys a reprieve from selling last week.
The US FOMC will announce an interest rate decision over night, where the market expects no surprises about its monetary stimulus programme which is only expected to be reduced from 2014.
“The market expects the Fed to start QE tapering only in March next year, but if the Fed policy statement proves to be a bit more hawkish, we would expect the rand together with other risky assets to weaken and vice versa,” Absa Capital analysts said in a note on Wednesday.
Investors are also keeping an eye on local labour disputes in the mining sector, where the Association of Mineworkers and Construction Union could call a strike at Impala Platinum.
Yields on government bonds were steady at 7.94 percent on the benchmark 2026 and 5.795 percent on the 2015 note.
The Treasury will announce issuance plans for next week at 11:00 Sa time, after which they will release the budget balance figure according to revenue and spending numbers up to the end of September.
The budget data is due at 14:00 SA time. - Reuters