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South Africa’s rand slips as investors tread cautiously

South Africa’s rand slips as investors tread cautiously




South Africa’s rand weakened early on Tuesday, with investors opting to take profits on the currency’s recent rally ahead of a lending rates decision later in the week.

At 0645 GMT the rand ZAR=D3 was 0.28% weaker at 15.3500 per dollar, compared with an overnight close of 15.3075 in New York, halting a three-session rally that carried the unit back near an eight-month best it hit last week.

The rand, along with other emerging market currencies, has benefited from the risk-on sentiment spurred by Joe Biden’s win in the United States presidential elections last week. Promising news of another COVID-19 vaccine has also boosted risk demand. a rates decision due on Thursday and likely credit reviews by ratings agencies Standard & Poors and Moody’s has dampened some of the enthusiasm.

The small chance of a rate cut, which would chip away at the returns investors earn on local assets, has prompted some investors to pocket profits on the rand’s 5% rally since the beginning of November.

The South African Reserve Bank (SARB) is likely to leave the repo rate at a record low at its Nov. 19 meeting and over the coming year, too, a Reuters poll of economists found. 22 economists surveyed, 17 expect Reserve Bank Governor Lesetja Kganyago to hold rates steady at 3.5%. The remaining five analysts forecast a 25-basis-point cut.



Source: Reuters

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