JOHANNESBURG (Reuters) – South Africa’s 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 0700 GMT the rand was 0.14% firmer at 18.3200 per dollar, versus an overnight close of 18.3460.
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.