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South African rand dips as markets await U.S. Fed meeting

06/15/2021 | 11:20am EDT
Photo illustration of South African bank notes displayed next to the American dollar notes in Johannesburg

JOHANNESBURG (Reuters) -South Africa's rand dipped on Tuesday, as investors awaited the conclusion of a much-anticipated Federal Reserve meeting to see whether the U.S. central bank would signal any change to the its monetary policy outlook.

At 1657 GMT, the rand traded at 13.8050 against the dollar, 0.2% weaker than its previous close.

The rand has been 2021's top performing emerging market currency, gaining more than 6% in the year so far, spurred by a boom in global commodity prices and low-interest rate environment in developed markets.

But the currency has suffered losses since the start of last week as traders cash in some of the gains.

"Although the rand has run out of steam for the time being, I would be careful of leaning towards a weakening rand just yet," Citadel Global director Bianca Botes said in a currency note.

"These levels continue to be rather appealing to any entity looking to hedge imports, or individuals looking to externalise funds," said Botes, adding that a conservative Fed would continue to be beneficial for the rand.

The Fed's two-day meeting starts on Tuesday.

Traders globally will look closely for hints in the Fed meeting's final statement about whether and when it plans to taper its bond buying programme, amid concerns about inflation as the U.S. economy bounces back from the COVID-19 pandemic.

South African financial markets will be closed for a public holiday on Wednesday when the Fed statement will be released.

Local stocks fell on Tuesday, with the Johannesburg Stock Exchange's Top-40 index closing 0.96% lower at 61,062 points and the broader All-Share index down 0.93% at 67,311 points.

Anglo American Plc was the biggest loser on the blue-chip index, falling just over 4%. Earlier on Tuesday, an Australian inquiry into a blast at one of its Queensland mines found the miner had exposed workers to excessive risk.

(Reporting by Olivia Kumwenda-Mtambo and Emma Rumney; Editing by Sherry Jacob-Phillips and Richard Chang)


ę Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
AUSTRALIAN DOLLAR / US DOLLAR (AUD/USD) 0.27% 0.74169 Delayed Quote.-4.33%
BRITISH POUND / US DOLLAR (GBP/USD) 0.21% 1.39473 Delayed Quote.1.58%
CANADIAN DOLLAR / US DOLLAR (CAD/USD) -0.10% 0.79699 Delayed Quote.1.86%
EURO / SOUTH AFRICAN RAND (EUR/ZAR) -0.14% 16.9627 Delayed Quote.-4.06%
EURO / US DOLLAR (EUR/USD) 0.21% 1.18937 Delayed Quote.-2.79%
INDIAN RUPEE / US DOLLAR (INR/USD) 0.16% 0.013489 Delayed Quote.-1.77%
NEW ZEALAND DOLLAR / US DOLLAR (NZD/USD) 0.44% 0.70757 Delayed Quote.-2.69%
US DOLLAR / SOUTH AFRICAN RAND (USD/ZAR) -0.38% 14.25813 Delayed Quote.-1.31%
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