Johannesburg - The rand snapped two days of gains against the US dollar on Wednesday as the euphoria from President Jacob Zuma appointing a new central bank governor wore off and markets looked ahead to a US Federal Reserve policy statement.
Markets are pricing in higher interest rates in the world's biggest economy, which would whittle down investors' appetite for high-yielding emerging market assets like the rand.
At 08:27 SA time, the local unit traded 0.3 percent softer at 11.2240 to the greenback compared with its New York close on Tuesday.
“The rand is slightly weaker this morning, but we would expect rand participants to largely mark time ahead of tonight's (Fed) minutes,” Barclays Africa said in a note.
“The rand and other emerging currencies are likely to come under renewed selling pressure if the minutes reveal a hawkish tone.”
Government bonds edged higher after Tuesday's weekly auction attracted strong demand, with the yield for the benchmark instrument maturing in 2026 dipping 2 basis points lower to 8.215 percent.
The rand had climbed to 11.1600 on Tuesday, its strongest since September 29, as the market applauded the news that deputy Governor Lesetja Kganyago would take over from retiring central bank head Gill Marcus next month.
Analysts believe Kganyago will continue to pursue Marcus's transparent policy stance, and uphold the central bank's independence from political interference. - Reuters