Money SA economy
The South African rand was a fraction softer against a firmer dollar in afternoon trade on Tuesday ahead of the Fed monetary policy decision later in the day.
At 3.26pm local time the rand was bid at R7.23 to the dollar, R9.51 to the euro and R11.39 to the pound. The euro was bid at $1.3126 from $1.3227 overnight.
A local dealer said: "It’s all about the Fed decision later today. The rand is slightly softer against a stronger dollar, but direction will come on the back of the Fed monetary policy decision.”
Dow Jones Newswires reports that the dollar strengthened broadly Tuesday as investors turned away from currencies most tied to the pace of global growth after a report indicating slowing domestic consumption in China.
Investors also turned to the perceived safety of the dollar ahead of the afternoon meeting of the Federal Reserve's rate-setting committee, which could announce Tuesday new measures to stimulate a sagging US economy.
"It is difficult to see how the Fed can avoid downgrading its view of the economic recovery at the conclusion of its policy meeting," said strategists at ING Financial Markets.
A throatier commitment to ultra-low interest rates could spur a round of buying of riskier currencies, as investors could become more confident ultra-cheap dollars will remain to buy higher-yielding assets.
