Cape Town - The rand swung between gains and losses against the dollar after the Federal Reserve cut stimulus while pledging to hold rates near zero.
South African bonds gained as Fitch Ratings affirmed the nation’s creditworthiness.
The Fed’s Open Market Committee said it will cut monthly bond and mortgage purchases to $75 billion from $85 billion, citing an improved outlook for the US employment market before jobless claims data today.
Fitch affirmed South Africa at BBB, the second-lowest investment level, with a stable outlook.
The rand’s “price action will once again most likely be somewhat testing as the markets contemplate the FOMC measures combined with somewhat illiquid markets as we head into the year end,” Mohammed Nalla, head of strategic research at Nedbank Group Ltd. in Johannesburg, said in e-mailed comments.
The rand weakened as much as 0.3 percent and gained 0.2 percent before trading little changed from yesterday’s close at 10.3417 per dollar by 10:09 a.m. in Johannesburg.
Benchmark rand-denominated bonds due December 2026 rose, sending yields down six basis points, or 0.06 percentage point, to 8.17 percent, the lowest on a closing basis since November 20.
Foreign investors sold a net 499 million rand ($48 million) of South African bonds and bought 484 million rand of equities yesterday, according to JSE Ltd. data. - Bloomberg News