Rand firms after Fed keep rates steady

Johannesburg - The rand firmed on Friday after the US Federal Reserve kept interest rates on hold.

The currency had weakened as much as 1% in the run-up to the decision, with market opinion divided on whether the Fed would raise rates for the first time since 2006.

By 10:49 the unit had gained 1.35% to R13.1800/$, with renewed appetite for emerging market assets lifting the currencies of economies considered to be risky investments. By 12:14 it was trading at R13.21/$.

"Overall, the latest FOMC statement from the Fed as well as (Fed chair Janet) Yellen’s own comments at her press conference can be considered relatively dovish," said Kevin Lings, chief economist at Stanlib.

The Fed said economic and financial developments globally could restrain economic activity in the US, putting further downward pressure on inflation in the near term.

However, the bank could still raise rates before year-end, with 13 of 17 Fed policymakers expecting a hike in 2015.

The South African Reserve Bank decides on rates next week when its three-day policy conference concludes on Wednesday.

It lifted interest rates by 25 basis points to 6.00% in a borderline call in August, citing the rand's vulnerability to global market reaction to monetary policy normalisation in the US.