Johannesburg - South Africa's rand steadied early on Friday, but looked vulnerable to a stronger dollar, after the South African central bank left interests rates unchanged while speculation grew that the Federal Reserve would raise US rates next month.
At 06h46 GMT, the rand traded at 15.7750 versus the dollar, not far off its New York close on Thursday of 15.7975.
“We do not expect any major moves today, but there is a risk of dollar gains and so rand weakness multi-day,” Rand Merchant Bank analyst John Cairns said in a note.
“The risk of a mid-year Fed hike remains the focus of global markets. Fears were ignited by the Fed minutes and have been fuelled by yesterday's strong third-tier data and by yet another hawkish statement from a Fed member.”
South Africa's Reserve Bank left its benchmark lending rate unchanged at 7 percent on Thursday. The central bank faces a combination of high inflation and low growth that puts pressure on the currency.
Stocks were set to open higher at 07h00 GMT, with the JSE securities exchange's Top-40 futures index was up 0.63 percent.
In fixed income, the yield for the benchmark government bond due in 2026 fell 5 basis points to 9.405 percent.
REUTERS