Picture: 123RF/UFUK ZIVANA
Picture: 123RF/UFUK ZIVANA

The rand staged a modest recovery on Wednesday morning, reflecting a degree of stability in commodity prices such as platinum group metals (PGMs) after a steep selloff earlier in the week.

The spot price of palladium was up 2% to $1,945/oz, though it was still down 15% over a one-month period. Platinum was up 0.60% to $960.91/oz, after its biggest one-day gain (3.6%) since mid-February on Tuesday.

The outcome of the US Federal Reserve’s policy meeting on Wednesday is likely to determine the next level for SA’s currency, which has traded erratically since mid-August as it swung from R15.40/$ to R14.12/$ last week and then back to current levels of R14.77/$.

Fed chair Jerome Powell could lay the ground for the reduction of the US central bank’s huge bond-buying programme, which has been a key pillar of support for risk assets, including the rand.

However, the disappointing US nonfarm payrolls report for August, which was attributable to the damaging effect of the highly transmissible Covid-19 Delta variant, has led to uncertainty about whether the Fed will still scale back its monetary support.

Elsewhere, Asian markets were mixed as investors weighed up the implications of a potential default in interest payments on its debt by China’s property Evergrande. The deadline is Thursday.

The liquidity crisis at Evergrande has raised doubts about growth prospects in the world’s second-largest economy, which is a key consumer for commodities produced in SA.

Japan’s Nikkei 225 index was down 0.52%, while Hong Kong’s Hang’s Seng was closed for a public holiday.

mahlangua@businesslive.co.za

subscribe

Would you like to comment on this article or view other readers' comments?
Register (it’s quick and free) or sign in now.

Speech Bubbles

Please read our Comment Policy before commenting.