JOHANNESBURG (Reuters) -The South African rand held steady on Wednesday, as investors bought into riskier assets following dovish comments from Federal Reserve Chair Jerome Powell who left the door open to further U.S. interest rate cuts.
At 1334 GMT, the rand traded at 17.3475 against the dollar, roughly up 0.2% on Tuesday’s close, while the greenback last traded flat against a basket of currencies.
Like other risk-sensitive currencies, the rand often takes cues from global drivers such as U.S. policy and economic data.
Powell said the end of the Fed’s long-running effort to shrink the size of its bond holdings may be coming into view.
“Extrapolating that back to ZAR implies that risk appetite will likely remain elevated. Should global central banks continue to ease, and AI investment continues to yield efficiencies that boost profitability, risk appetite will remain supportive of the ZAR,” said ETM Analytics in a research note.
“With gold and platinum prices surging higher and SA’s terms of trade as strong as ever, the probability is high that the ZAR will regain its footing later this week or next and attempt another assault on the 17.00/dlr level.”
Statistics South Africa data showed that retail sales rose 2.3% year-on-year in August, after rising by a revised 5.7% in July.
Economists polled by Reuters had expected sales to rise 4.4%.
On the Johannesburg Stock Exchange, the Top-40 index was last up 0.3%.
South Africa’s benchmark 2035 government bond was also stronger, as the yield fell 5 basis points to 9.09%.
(Reporting by Anathi Madubela and Sfundo ParakozovEditing by Mark Potter, Kirsten Donovan)
