Sean Gladwell/ Getty Images
The rand strengthened Thursday, as sentiment was boosted by
the dollar’s pullback and South Africa’s first interest-rate cut in four years.
The currency pared earlier stronger gains, however, to trade
0.4% higher at at 17.4846 per dollar by 5:30 p.m. in Johannesburg. It
earlier rose as much as 0.9% to touch the strongest level since February 2023.
Lesetja Kganyago, governor of the South African Reserve
Bank, announced a 25 basis-point reduction in the benchmark rate to 8%, in line
with estimates of 21 of 22 economists surveyed by Bloomberg.
Win Thin, a strategist at Brown Brothers Harriman & Co.,
said that after Wednesday’s benign inflation print, “this cut was a done
deal.” While the market is pricing steady rates for the next three months,
he said he would not rule out another cut at the SARB’s Nov. 21 meeting.
The SARB’s decision follows the US Federal Reserve’s move to
lower its benchmark interest rate by half a percentage point on Wednesday. The
move has offered relief to emerging-market currencies like the rand as the
dollar pulled back.
Brendan McKenna, FX strategist at Wells Fargo Securities
LLC, said that “if the rand continues to perform well, maybe SARB can pick
up the pace of easing later this year after a gradual start.”
