The rand edged up early on Wednesday, clinging on to gains spurred by global hopes of a coronavirus vaccine even as investors remained cautious and limited their bets a day ahead of a central bank rate decision.
At 12:28 the rand was 1.93% firmer at R17.98 per dollar, versus an overnight close of R18.34.
The pound was 1.80% stronger at R22.06 and the euro 1.69% at R19.69.
Optimism that a Covid-19 vaccine trial is showing promising results has lifted demand for emerging market currencies in recent sessions, but fears around the depth of a global recession due to the pandemic have dampened risk appetite.
“For now, it seems that the market may be in wait-and-see mode ahead of tomorrow’s Sarb rate verdict. This means that we could be in store for some more range-bound trading in the session ahead,” economists at ETM Analytics said in a note.
A Reuters poll of analysts expects the South African Reserve Bank (Sarb) to cut rates by 50 basis points (bps) to 3.75%, but some see the possibility of a deeper, 100 bps cut. That’s on top of 225 bps-worth of rate reductions since March.