South Africa’s rand firmed in early trade on Wednesday, as the dollar pulled back from its overnight two-decade peak ahead of a U.S. Federal Reserve policy meeting.
The dollar index, which measures the greenback against a basket of six major peers, was trading at 104.89, after hitting 105.65 on Tuesday, its strongest level since late 2002.
Analysts had largely been predicting that the Fed would hike by 50 basis points at the conclusion of its meeting on Wednesday before last week’s higher-than-expected U.S. inflation data for May. But markets are now pricing in an outsized 75 basis point interest rate hike following the inflation figures.
The government’s benchmark 2030 bond firmed slightly in early deals, with the yield down 3.5 basis points to 10.355%. (Reporting by Bhargav Acharya in Bengaluru and Promit Mukherjee in Johannesburg)