Rand gains against the US dollar

Johannesburg - The rand firmed against the dollar early on Wednesday, boosted by dovish US policy comments from Federal Reserve officials overnight.

At 08:45 Sa time, the rand was up over 0.4 percent against the dollar to 10.2025.

The local unit had closed at 10.2460 in New York as poor international appetite for risk and domestic strikes weighed on South African assets.

However, comments from two Fed officials about the US central bank's bond-buying programme are propping the rand.

“There were some dovish remarks from the Fed's Williams and Lacker overnight which has ensured that the rand is not currently affected by broad-based dollar strength,” Absa Capital's Mike Keenan said in a note.

The rand is strengthening in Tuesday's range and remains vulnerable to global risk sentiment.

“If this week's US employment data prove better than expected, then the rand could quickly fall victim to a stronger dollar environment again. Hence, we still advocate buying dollar dips in the near term,” Keenan said.

Investors are also watching strikes in the mining sector that have hit sentiment towards South Africa in the last year.

Workers from the National Union of Mineworkers began a strike over wages at mid-tier producer Northam Platinum on Sunday evening.

Fears remain that the strike will spread across the platinum industry, potentially hitting about half of global output and dealing a fresh blow to investor confidence in South Africa.

Yields on government bonds nudged up one basis point to 8.155 percent on the benchmark 2026 issue.

The Treasury will announce issuance plans for next week at 11:00 SA time.

The South African Chamber of Commerce and Industry will release the Business Confidence Index for October at 11:30 SA time.

The business sentiment gauge edged up in September but showed confidence levels were still low compared with last year. - Reuters