Rand softer ahead of rate decision, stocks slide

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The rand had managed to withstand the greenback’s recovery in the last two sessions and in early trade on Wednesday touched a session-best R13.9425, aided in part by a solid retail sales print boosting bets the economy would avoid a second consecutive quarterly contraction.

JOHANNESBURG - The rand edged lower on Wednesday in cautious trade ahead of an interest rate decision that is set to test the currency’s recent rally and its ability to draw yield-seeking investors.

South Africa’s central bank meets on Thursday. According to a Reuters poll last week, it is set to cut interest rates by 25 basis points, while forward rate markets on Wednesday showed investors pricing in a close to 40% probability of a cut by that margin. But as traders in New York came online later in the session the rand stalled, with dollar bulls emboldened by better-than-expected data on US jobs, inflation and retail sales in previous sessions.

The benchmark JSE Top-40 Index was down 0.76% at 51,565 points while the broader All-Share Index dropped 0.83% to 57,573 points.

 

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