Rand bolstered by weaker dollar

The rand edged higher in early trade on Monday, bolstered by dollar weakness on bets the Federal Reserve will slow the pace of its interest rates hikes.

At 0705 GMT, the rand traded at R16.55 against the dollar, around 0.3% stronger than its previous close.

The dollar was down about 0.3% against a basket of currencies.

The rand is highly susceptible to shifts in global market sentiment and changes to the outlook for US monetary policy.

This week the domestic data calendar features purchasing managers index surveys, for the manufacturing sector and whole economy. Investors will also monitor debates within the governing African National Congress (ANC) over the role of the central bank.

An ANC policy conference at the weekend included discussions over whether to expand the South African Reserve Bank’s mandate beyond price stability, and delegates made a renewed commitment to nationalise the bank.

“Many of the policy proposals that were put forward will do nothing but alarm investors,” ETM Analytics said in a research note, citing talks over broadening the bank’s mandate at a time when inflation is at multi-year highs as one example.

The South African government’s benchmark 2030 bond was little changed in early deals, with the yield down 0.5 basis points to 10.355%.