Rand extends gains after Fed rate hold

The rand firmed in early trade on Thursday against a weaker U.S. dollar after the Federal Reserve kept interest rates unchanged.

At 0600 GMT, the rand traded at R18.49 against the dollar.

The dollar was last down about 0.09% against a basket of global currencies.

The rand had strengthened on Wednesday after South Africa’s mid-term budget statement, despite the proposal for tax measures next year to raise additional revenue as budget deficits are projected to widen over the next three years.

Later on Wednesday, the Fed announced its decision to keep interest rates unchanged in the world’s biggest economy, weakening the dollar as investors perceived that the US central bank may be done raising rates.

“USD/ZAR’s momentum is still solidly to the downside, but it has probably run too far too fast and needs some consolidation,” Rand Merchant Bank analysts said in a morning briefing.

The risk-sensitive rand often takes cues from global factors like US monetary policy in addition to local drivers.

South Africa’s benchmark 2030 government bond was flat in early deals at 10.505%.