(Bloomberg) -- The rand strengthened Thursday, as sentiment was boosted by the dollar’s pullback and South Africa’s first interest-rate cut in four years.
The currency pared earlier stronger gains, however, to trade 0.4% higher at at 17.4846 per dollar by 5:30 p.m. in Johannesburg. It earlier rose as much as 0.9% to touch the strongest level since February 2023.
Lesetja Kganyago, governor of the South African Reserve Bank, announced a 25 basis-point reduction in the benchmark rate to 8%, in line with estimates of 21 of 22 economists surveyed by Bloomberg.
Win Thin, a strategist at Brown Brothers Harriman & Co., said that after Wednesday’s benign inflation print, “this cut was a done deal.” While the market is pricing steady rates for the next three months, he said he would not rule out another cut at the SARB’s Nov. 21 meeting.
The SARB’s decision follows the US Federal Reserve’s move to lower its benchmark interest rate by half a percentage point on Wednesday. The move has offered relief to emerging-market currencies like the rand as the dollar pulled back.
Brendan McKenna, FX strategist at Wells Fargo Securities LLC, said that “if the rand continues to perform well, maybe SARB can pick up the pace of easing later this year after a gradual start.”
--With assistance from Mpho Hlakudi.
(Updates currency move, adds detail on rate decision)
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