(Updates prices to reflect afternoon trade)
June 20 (Reuters) – South Africa’s rand firmed against the dollar on Monday, as investors continued to assess risks to the economy from tighter U.S. monetary policy following the Federal Reserve’s biggest interest rate increase in a quarter of a century.
At 1545 GMT, the rand traded at 16.0250 per dollar, 0.14% stronger than its previous close.
The dollar index was down 0.33% at 104.34, after reaching a two-decade high of 105.79 in the middle of last week.
Analysts have said the rand’s value against the dollar is still finding directional cues from the ever-changing outlook for U.S. monetary policy and the risk of recession down the line.
“The risk is that the U.S. economy slows more quickly than its policymakers and markets anticipate, with a recession, and not necessarily a mild one, spooking markets as stagflation worsens on obdurate supply side price pressures, weakening the rand,” Investec analyst Annabel Bishop said in a note.
Stocks in the Johannesburg Stock Exchange (JSE) were up, mirroring the modest gains in the global markets at the start of the week, which is likely to be dominated by news on the path for interest rates and inflation.
Overall on the JSE, the All-Share index rose 1.47% to 66,350 points while the Top-40 index closed 1.68% higher at 60,074 points.
The government’s benchmark 2030 bond was steady, with the yield down by 0.5 points at 10.240%. (Reporting by Anait Miridzhanian in Gdansk and Bhargav Acharya in Bengaluru; Editing by Bradley Perrett and Alison Williams)