Rand trades in a narrow range as global risk demand slows

The rand clung to recent gains early on Wednesday as global risk appetite retreated after the United States central bank played down expectations of aggressive interest-rate cuts.

At 0645 GMT, the rand was up 0.19% at 14.33 per dollar from an overnight close of 14.35. Lack of local economic data and a political lull kept the currency in a narrow range.

The early session was mixed for emerging-market currencies, with most Asian currencies slipping back while commodity-backed currencies remained steady.

“Yesterday evening saw speeches from a few Fed officials tempering down the possibility of US rate cuts at the July meeting,” said Oliver Alwar said, a senior trader at Standard Bank. “This resulted in EM currencies relinquishing some gains, global equities retreating and the dollar come back to a small degree.”

On Tuesday, members of the Federal Reserve’s policy committee toned down the outlook for rates, with St Louis Fed President James Bullard saying a 50-basis-point rate cut “would be overdone.”

Investors still expect a cut of at least a quarter point at the bank’s July meeting.

Bonds were flat, with the yield on the benchmark bond due in 2026 down 0.5 basis points to 8.165%.