Picture: REUTERS
Picture: REUTERS

The rand lost a bit of momentum on Thursday morning, but still fared better than it had earlier in the week.

The rand bought a single dollar at R11.84 in early trade, compared with R12.11 at the start of the week.

The stronger rand boosts the inflation outlook, but hurts exporters.

The local currency took advantage of a weak dollar, after US Federal Reserve stuck to its gradualist approach in raising interest rates.

As widely expected, the Fed raised rates by 25 basis points on Wednesday at its two-day policy meeting, but expressed concern about inflation that still ran below its 2% target.

"Having been anticipated, the rate hike is, for the most part, already priced in to currency markets," said Peregrine Treasury Solutions analyst Bianca Botes.

"The emphasis now falls on how hawkish the Fed is, rather than the actual hike. The Fed indicated that the growth forecast has been adjusted upward and rates will remain dependent on inflation as well as economic activity."

The Fed’s statement undermined the dollar to the benefit of the rand and other currencies.

The less hawkish Fed’s language bodes well for so-called carry trade, where money is borrowed in low interest-rate environments and invested in currencies that offer higher returns.

With the Fed meeting out of the away, the focus is likely to return to the White House, which is expected to announce trade tariffs against China later in the day.

At 8.23am, the rand was at R11.8366 to the dollar from R11.8299, R14.6159 to the euro from R14.5992 and at R16.7466 to the pound from R16.7282.

The euro was at $1.2347 from $1.2340.