The South African rand strengthened in early trade on Wednesday, buoyed by record-high gold prices, as global markets focused on U.S. inflation indicators that could influence the Federal Reserve’s interest rate trajectory.
At 0805 GMT, the rand traded at 16.3525 against the dollar, up roughly 0.2% from Tuesday’s close.
Gold, one of South Africa’s major exports, hit record levels, while silver climbed above $90 for the first time, boosting sentiment for the rand and local equities.
The U.S. dollar remained flat against a basket of currencies as traders digested softer-than-expected U.S. inflation readings and awaited core Producer Price Index data for December later in the day.
“The Fed is widely expected to pause on any further interest rate hikes, despite pressure from Trump to lower rates,” said Andre Cilliers, currency strategist at TreasuryONE. He added that the rand is likely to remain in a tight range, taking cues from global developments such as unrest in Iran, concerns over the Fed’s independence, and a potential extension of the African Growth and Opportunity Act.
On the Johannesburg Stock Exchange, the Top-40 index (.JTOPI) was up 0.4% in early trading, while South Africa’s benchmark 2035 government bond gained, with yields falling three basis points to 8.28%.
