Rand weaker in tentative trade ahead of Fed policy decision
JOHANNESBURG - The rand was weaker early on Wednesday as caution set in ahead of the US Federal Reserve's latest policy decision, which will likely set the tone for global currency trading in the coming sessions.
At 0715 GMT, the rand was 0.2 percent weaker at 14.4100 per dollar, its worst level in two weeks, compared with an overnight close of 14.3750 overnight in New York.
With local markets closed on Tuesday for a national holiday, rand volumes were thin overnight, keeping the currency within a recent range tilted to the upside as investors worried about rate hikes by the Fed.
The Fed is widely expected to maintain its policy stance and likely to repeat its dovish message, but some analysts say signs of rising inflation could nudge the central bank to abandon its rhetoric that a policy tightening was still a long way off.
"With the FOMC rate decision tonight I can't imagine we will see any kind of fireworks today," said chief trader at Standard Bank, Warrick Butler, in a note.
"The market may try to price in some new hawkish point from (Fed chairman) Powell, but if that happens it will be a remarkable surprise given that nothing has changed globally or in the US since we last heard from him."
Bonds were also weaker, with the yield on the benchmark 2030 government issue up 8.5 basis points at 9.24 percent.