Picture: REUTERS
Picture: REUTERS

The rand was firmer on Monday morning, as investors shift their focus to the US Federal Reserve’s interest rate decision this week.

Markets have priced in a 25-basis point cut at the Fed’s meeting on Wednesday, this would be the Fed's third rate cut this year.

Lower interest rates in the US will fuel inflation in the world's largest economy, putting a little more pressure on the dollar, as higher inflation will reduce the purchasing power of the  currency over time, therefore benefiting the rand and other emerging-market currencies.

Locally, markets are awaiting the medium-term budget policy statement as well as a ratings review by  Moody's Investors Service this week.

Investec economist Annabel Bishop said the rand is likely to see a relief rally should Moody’s not downgrade SA below investment grade.

“We maintain our view of no credit rating downgrade from Moody’s this year, but with a heightened risk of one occurring, although a drop to a negative outlook remains more likely,” said Investec economist Annabel Bishop.

At 10.15am, the rand had firmed 0.43% to R14.5501/$ after closing at R14.61 on Friday. It had strengthened 0.35% to R16.1423/€ and 0.2% to R18.6952/£. The euro had strengthened 0.13% to $1.1094. 

Gold was flat at $1,504.84/oz while platinum added 0.49% to $925.65. Brent crude was down 0.1% to $61.90 a barrel.

mjoo@businesslive.co.za