The rand gained more than 1% against the dollar on Wednesday morning to trade at its best level in just over four months, as emerging market currencies fared well ahead of the release of minutes from the US Federal Reserve's last meeting later in the day.
At 11.30 the rand had gained 1.10% to trade at R16.82 to the dollar, its best level since late September. It gained 0.23% to change hands at R20.31 to the pound and was up 0.36% at R17.88 to the euro. Investors will be eyeing the minutes for clues on the Fed's next moves. After implementing four consecutive 75 basis point interest rate hikes in 2022, the Fed only raised rates by 50 basis points in December. There are concerns that the fight against inflation will prompt a sharp slowdown in the US economy, and possibly even a recession.
All emerging market currencies, with the exception of the Brazilian real, were faring well on Wednesday, noted TreasuryONE currency strategy Andre Cilliers, with the rand and Mexican peso leading gains. Brazil's real was under some pressure amid the swearing in of left-wing president Lula da Silva, he said.
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