The South African rand traded largely unchanged in early dealings on Thursday, with market participants holding back ahead of important U.S. inflation data that could shape expectations for the Federal Reserve’s next policy move.
At 0705 GMT, the rand was quoted at 16.05 to the dollar, virtually flat compared with its previous close of 16.0525.
Minutes from the Federal Reserve’s January meeting showed policymakers were almost unanimously in favour of keeping interest rates steady for now. However, divisions remain over the next step, with several officials leaving the door open to further rate hikes if inflation stays high, while others would support additional cuts should inflation ease.
Markets are currently pricing in the first U.S. interest rate cut of the year for June.
As a risk-sensitive currency, the rand is often influenced by global factors — particularly U.S. monetary policy — alongside domestic developments.
“The rand is largely unchanged from late yesterday, despite the firmer dollar, though the stronger greenback may keep some short-term pressure on the currency,” said Wichard Cilliers, head of market risk at TreasuryONE, in a research note.
Meanwhile, gold — one of South Africa’s key exports — was steady on Thursday as ongoing tensions between the United States and Iran continued to support safe-haven demand.
“Overall, currency and commodity markets remain cautious as they await clearer direction from upcoming U.S. economic data,” Cilliers added.
South Africa’s benchmark 2035 government bond was also little changed in early trade, with the yield holding at 7.955%.