South African rand falls as dollar gains on Fed expectations

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JOHANNESBURG, September 29 (Reuters)The South African rand fell on Wednesday as the dollar rose amid heightened expectations that the US Federal Reserve would tighten monetary policy.

At 1605 GMT, the rand ZAR = D3 traded at 15.1550 against the dollar, about 0.4% weaker than its previous close and heading for its fourth consecutive daily decline.

The dollar .DXY was up 0.5% against a basket of currencies.

The US currency, seen as a safe haven in times of market stress, has strengthened in recent days as investors focus on fears of a global economic slowdown, rising energy prices and a rise in US Treasury yields.

Some traders fear the Fed will start to withdraw political support just as global growth slows.

South Africa’s central bank kept its main policy rate unchanged at an all-time high of 3.5% last week, saying an economic rebound from the COVID-19 pandemic was largely over.

On Thursday there will be a flurry of national economic data releases, including August credit numbers. ZACRED = ECI, producer price inflation ZAPPIY = ECI and sales figures ZATBAL = ECI.

Johannesburg-listed stocks rose on Wednesday on investor confidence that China will contain a power crunch and the debt problems of property developer Evergrande.

“Ultimately it all comes down to commodities for the South African market which is driven by Chinese demand,” said Wayne McCurrie, portfolio manager at FNB.

The fall in commodity prices is limited because China is likely to quickly contain a crisis, being a centrally controlled economy, he said.

The All-share index .JALSH closed 0.91% higher at 64,364 points while the blue chip Top-40 index .JTOPI finished up 0.97% to 58,022 points.

The stock market was boosted by stocks focused on the local economy such as financials .JBANK as well as minors .JRESI, but listed real estate stocks posted losses .JPROP.

In fixed income, the yield on the 2030 government bond ZAR2030 = fell 3.5 basis points to 9.27%, reflecting a stronger price.

(Reporting by Promit Mukherjee and Alexander Winning; editing by Bernadette Baum)

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