Rand regains some ground against strong dollar

The rand was slightly stronger in early trade on Tuesday, as the US dollar slipped from an 11-week high reached the previous day on lowered expectations of an early interest rate cut by the Federal Reserve.

At 0620 GMT, the rand traded at R19.00 against the dollar.

The dollar index was down 0.124% at 104.33. It touched 104.60 in the last session, its highest since November 14, as traders slashed bets that the Fed would aggressively cut rates this year.

There was little positive news at home to boost the rand, analysts said.

Investors will be looking toward President Cyril Ramaphosa’s State of the Nation Address (SONA) later this week to see what solutions are proposed to fix South Africa’s power crisis and rail and port problems, which have strangled growth in Africa’s most industrialised economy.

“An extended surge in the US dollar may have driven some of the (rand’s) weakness, but SA has done itself no favours and will not stand out as a currency to buy unless the state takes dramatic reform action,” ETM Analytics said in a research note.

South Africa’s benchmark 2030 government bond was stronger in early deals, with the yield down 2.5 basis points to 9.845%.