Rand steady after rate hike rally

JOHANNESBURG – South Africa’s rand was steady on Friday after firming sharply on the central bank’s 50 basis point hike in interest rates on Thursday, and was likely to remain volatile in the short term, dealers said.

The currency gained more than two per cent against the dollar on Thursday, initially weakening following the rate hike decision before rallying to a three-week high, partly on relief the rate increase wasn’t bigger. At 0650 GMT, the currency was trading at 7,5380/US$, in line with its New York close.It has firmed almost six percent from a three-and-a-quarter-year low of 7,98/US$ hit last week.South Africa’s central bank lifted its repo rate to 8,5 per cent on Thursday, the third half percentage rise since June in an effort to curb inflationary pressures.Traders said the rand also benefited from improved sentiment towards emerging markets and a retracement of recent dollar gains as investors cut their long US dollar positions.Nampa-ReutersAt 0650 GMT, the currency was trading at 7,5380/US$, in line with its New York close.It has firmed almost six percent from a three-and-a-quarter-year low of 7,98/US$ hit last week.South Africa’s central bank lifted its repo rate to 8,5 per cent on Thursday, the third half percentage rise since June in an effort to curb inflationary pressures.Traders said the rand also benefited from improved sentiment towards emerging markets and a retracement of recent dollar gains as investors cut their long US dollar positions.Nampa-Reuters