The rand was firmer on Wednesday afternoon, finding some support from market cheer over the sealing of a budget deal between Italy and the EU.
According to reports, a deal has been struck but still requires assent from Italy’s legislature.
A settled relationship between Rome and Brussels ahead of European elections reduces the risk of rhetoric escalating and with that, the redenomination narrative, said Barclay’s Research analysts, referring to the inflationary effects of fiscal deficits on the euro.
At 2pm the rand was 0.57% stronger to the dollar at R14.2726, 0.26% against the euro at R16.2738 and 0.51% against the pound at R18.0546. The euro was 0.33% up at $1.1402. The rand often tracks the euro as, among other factors, the resultant weaker dollar makes commodities more attractive.
All eyes remain on the US Federal Reserve, which is set to announce its latest stance on monetary policy at 9pm South African time. The Fed is expected to raise rates by 25 basis points, but investor focus is likely to be on its forward guidance.
A dovish statement is expected, due to clear signs of slowing global growth — something that is taking place amid moderating inflation, analysts said.