South African rand steady as traders await updates on AGOA, US government shutdown
The South African rand was steady in early trade on Thursday, while investors awaited news on whether the United States' flagship trade initiative with Africa, which expired on Tuesday, will be renewed.
They were also weighing how long the US government shutdown will last, its effect on economic data releases, and how that will play into the Federal Reserve's decision-making.
At 0757 GMT the rand traded at 17.23 against the dollar, a whisker away from Wednesday's close, while the greenback continued its weak streak against a basket of currencies.
The rand, often sensitive to shifts in global risk sentiment, found some support after Trade Minister Parks Tau expressed optimism over the renewal of the US' African Growth and Opportunity Act (AGOA).
Deputy Trade Director Xolelwa Mlumbi-Peter echoed this sentiment, telling local radio station 702 that both the US administration and Congress appeared to back an extension.
"The understanding at this stage is that it will be a straight extension so all the countries that are currently beneficiaries of AGOA will therefore be included in the short-term extension, including South Africa," said Mlumbi-Peter.
But ETM Analytics said in a research note that South Africa's inclusion is not guaranteed, citing its geopolitical stance on issues involving Russia, the Brics bloc, Israel, and Iran.
"Should South Africa be excluded, a ZAR sell-off would be possible, even if broader USD softness cushions the downside. For now, however, momentum and carry appeal firmly support the rand," said the note.
In fixed income, government bonds were flat in early deals, as the yield for debt maturing in 2035 fell half a basis point to 9.165%.
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