The rand on Thursday breached the key R17.50 to the dollar mark after the US rate cut of 50 basis points (bps), which was greater-than-expected and the jumbo cut the market had been looking for.
The Federal Open Market Committee (FOMC) cut the federal funds target rate by 0.5% to to the range of 4.75%-5%% on Wednesday night, on progress on inflation and the balance of risks as the FOMCs inflation forecasts fell and unemployment rate projections rose.
Annabel Bishop, the chief economist at Investec, said: The markets had not factored in a -50bp cut and the Bloomberg economic consensus was also for a -25bp cut. Consequently, the bigger-than-expected drop in the fed funds rate caused EM (emerging market) currency strength, with the rand reaching R17.46 to the dollar.
By 10.39am on Thursday, the rand was 0.23% higher at R17.46 to the dollar.
The rand has been volatile as financial market expectations has shifted on the timing and speed of the anticipated US interest rate cuts, at R18.23 to the dollar in January, reaching R19.39 in February, and dipping above and below R19.00 in the first half or 2024, she said.
