Rand extends relief rally as dollar falters on Fed’s rates outlook
Despite the expected rise in interest rates by the US central bank, the dollar weakened on its future guidance and a drop in its GDP forecast
The rand continued to firm on Thursday afternoon, indicating fading concerns about the US Federal Reserve’s approach to interest rates in the coming months. The local currency benefited from a sharp drop in the value of the dollar against a basket of currencies, notably the euro. The sharp weakness in the dollar came hours after the Fed concluded its two-day meeting on Wednesday night, at which it hiked rates by 25 basis points, as expected. The Fed also forecast two more increases in rates in 2019, instead of three, as promised previously. The US central bank also revised down its forecast for GDP growth to 2.3% in 2019, from 2.5% previously. The rand retreated in the immediate aftermath of the statement, before subsequently recouping much of its losses against the dollar. Local bonds were a fair bit firmer on the day, with the yield on the benchmark R186 government bond dipping below 9% for the first time since late August, according to Iress data. The stronger rand and local bond...
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