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London - The rand came under pressure on Wednesday on expectations that the Federal Reserve will press on with stimulus cuts.
The rand reeled more than 3% to a five-year low of R11.3800/$ after the South Africa Reserve Bank announced it was raising its benchmark repo rate by 50 basis points to 5.50%. The currency was still down 2.2% by 14:16 GMT.
With markets once again in a volatile state and the US Federal Reserve expected to press on with cutting back its huge stimulus later in the day, it looked to be a hectic few hours ahead for traders.
European shares had initially ridden the wave of optimism that spilled in from Asia, but Britain's FTSE 100, Germany's DAX and France's CAC 40 were all in deep negative territory as US trading began.
Wall Street opened down too, with the main S&P 500 and Dow Jones indexes both off 0.8 percent, with the jitters surrounding emerging markets teeing traders up for a nervy run in to the 19:00 GMT Fed policy announcement.
The US central bank is widely expected to trim its asset-buying programme by another $10bn a month, after the conclusion of its two-day policy meeting.
This 'tapering' process has been a major factor in the recent emerging market sell-off, because much of the Fed's largesse has flowed to the higher-yielding assets to be found in these markets.
"It's going to be a long year for the 'fragile five'" said Jose Wynne, managing director of research at Barclay's referring Turkey, Indonesia, South Africa, Brazil and India, adding however that Turkey's hike had been a sensible move.
The rand reeled more than 3% to a five-year low of R11.3800/$ after the South Africa Reserve Bank announced it was raising its benchmark repo rate by 50 basis points to 5.50%. The currency was still down 2.2% by 14:16 GMT.
With markets once again in a volatile state and the US Federal Reserve expected to press on with cutting back its huge stimulus later in the day, it looked to be a hectic few hours ahead for traders.
European shares had initially ridden the wave of optimism that spilled in from Asia, but Britain's FTSE 100, Germany's DAX and France's CAC 40 were all in deep negative territory as US trading began.
Wall Street opened down too, with the main S&P 500 and Dow Jones indexes both off 0.8 percent, with the jitters surrounding emerging markets teeing traders up for a nervy run in to the 19:00 GMT Fed policy announcement.
The US central bank is widely expected to trim its asset-buying programme by another $10bn a month, after the conclusion of its two-day policy meeting.
This 'tapering' process has been a major factor in the recent emerging market sell-off, because much of the Fed's largesse has flowed to the higher-yielding assets to be found in these markets.
"It's going to be a long year for the 'fragile five'" said Jose Wynne, managing director of research at Barclay's referring Turkey, Indonesia, South Africa, Brazil and India, adding however that Turkey's hike had been a sensible move.
