JOHANNESBURG (Reuters) -The South African rand extended its gains against the dollar on Thursday after the U.S. currency slipped on rising expectations that U.S. interest rate cuts are on the way.
At 1534 GMT, the rand traded at 18.2675 against the dollar, more than 0.8% stronger than its previous close.
The dollar index last traded down almost 0.2% against a basket of currencies.
“The recent recovery over the past two days is largely influenced by external factors rather than domestic ones, with today’s U.S. holiday providing some support for the rand,” said Zain Vawda, market analyst at MarketPulse by OANDA.
The rand, which had a turbulent time earlier in the week, extended its rally from Wednesday, as markets priced in a potential U.S. rate cut as early as September.
Weak economic data out of the U.S. and minutes of the Federal Reserve’s June meeting on Wednesday acknowledged the country’s economy appeared to be slowing and price pressures diminishing.
With a South African government formed and sworn in after elections on May 29, and few major local economic reports due in the week ahead, the rand is set to take cues from global drivers like U.S. monetary policy.
On the stock market, the Top-40 index closed more than 0.4% higher.
South Africa’s benchmark 2030 government bond was also stronger, as the yield fell 3 basis points to 9.785%.
(Reporting by Bhargav Acharya and Tannur Anders; Editing by David Holmes and Jane Merriman)
