The dollar and the rand. Picture: REUTERS, SIPHIWE SIBEKO
The dollar and the rand. Picture: REUTERS, SIPHIWE SIBEKO

The rand held steady at relatively improved levels on Wednesday afternoon as calm prevailed in the local currency market, while the Turkish lira hit yet another record low against the dollar.

The rand has been at the coal face of the shift in global sentiment in favour of the dollar, fuelled by higher interest-rate expectations.

The improvement in the dollar, which is the world’s reserve currency, came amid a pick-up in international oil prices and the consequent rise in US government bond yields.

The strong dollar has also tempered so-called "Ramaphoria", which played out in a stronger rand and lower local government bond yields early in the first quarter.

The rand has lost substantial ground since the start of the current quarter, as have local bonds, which could lead the South African Reserve Bank to revise its inflation forecast upwards.

The Bank’s monetary policy committee meets next week to decide on interest rates.

Standard Bank trader Warrick Butler said in an e-mailed note that investors who were "heavily positioned" in emerging markets were starting to feel the strain of interest-rate compression, as a result of big moves in US bond rates.

The rand plummeted more than 2% against the dollar on Tuesday, its biggest one-day drop since October.

In addition to higher oil prices, markets are also monitoring public-sector wage talks.

At 2.46pm, the rand was at R12.498 to the dollar from R12.5662, R14.7195 to the euro from R14.8745 and at R16.8373 to the pound from R16.9712.

The euro was at $1.1778, from $1.1838.