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South Africa's rand steadies, investors eye Fed meeting

(Adds stocks, updates levels, adds rand comment)

JOHANNESBURG, March 19 (Reuters) - South Africa's rand steadied on Tuesday as the prospect of rolling blackouts and downbeat economic data offset expectations that a dovish tone at this week's U.S. Federal Reserve policy meeting could lift emerging market assets.

At 1637 GMT, the rand traded at 14.4425 per dollar, 0.02 percent weaker than its New York close on Monday.

The Fed's two-day meeting starts later on Tuesday. Money markets are pricing in a 99 percent probability of U.S. borrowing costs not being altered on Wednesday.

"A dovish Fed will trigger a risk-on rally for risk assets. But the rand's gains will be curbed by rolling blackouts and sales data that is likely to disappoint," RMB analyst Mpho Tsebe said in a note.

Caution prevailed among investors as South Africa's power utility said it would continue implementing power cuts on a rotational basis as it struggles with generating capacity shortages.

Analysts say power cuts, which have happened in several rounds since June last year, are one of the reasons why business confidence has slumped in recent months.

Statistics South Africa is scheduled to publish February consumer price inflation figures and January retail sales data on Wednesday.

In fixed income, the yield on the benchmark government bond due in 2026 rose 6.5 basis points to 8.76 percent.

Stocks meanwhile rose, with the Johannesburg All-Share index up 0.14 percent to 56,849 points, while the Top-40 Index firmed 0.17 percent to 50,475 points.

Commodity stocks lead the bourse higher as palladium surged past $1,600 for the first time on Tuesday on expectations that an already strained supply scenario for the autocatalyst metal could worsen, while platinum soared 3 percent.

Gold also joined other precious metals to benefit from a weaker dollar going into the Fed meeting.

Sibanye-Stillwater jumped 8.45 percent to 16.56 rand, Lonmin Plc climbed 4.85 percent, and Impala Platinum rose 2.56 percent to 67.22 rand. (Reporting by Olivia Kumwenda-Mtambo and Nqobile Dludla; Editing by Jan Harvey)

2019-03-19 18:39:52

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