JOHANNESBURG: The rand ended firmer against the dollar on Friday, helped by construction workers agreeing a wage deal that ended a three-week strike, but trade was cautious ahead of central bank decisions next week.
The South African currency traded at 9.9530 to the dollar at 1600 GMT, 0.2 percent stronger than its close in New York on Thursday.
The end of the construction workers' strike following an agreement on wage hikes of up to 12 percent offered a respite from labour unrest in Africa's biggest economy, supporting the rand.
Investors, however, were starting to look towards crucial economic data and monetary policy decisions by the South African Reserve Bank (SARB) and the US Federal Reserve next week.
They will be seeking clarity from the Fed on whether it will reduce its bond-buying programme, and by how much, as the US economy shows signs of improvement. An expected tapering of US stimulus would potentially reduce capital flows into emerging markets, including South Africa, although it has been largely priced in already.
Concerns about South Africa's current account deficit and the prospect of reduced capital inflows when the Fed starts reducing stimulus have depressed the rand, which hit a four-year low against the dollar on Aug. 28.
"We expect that the Fed will proceed cautiously with the tapering exercise, and that the market could see something of a relief rally into that, although a portion of this might have already happened on the soft payrolls numbers we saw last Friday," said Bruce Donald, a currency strategist at Standard Bank.
Weaker-than-expected US non-farm payrolls data last week boosted the rand, as it cast doubt on the Fed reducing stimulus by a big amount.
South Africa releases consumer inflation and retail sales data on Wednesday, a day before the SARB announces its decision on interest rates.
With inflation rising, and expected to stay high because of the weak rand, while economic growth is subdued, the SARB has little room to maneuver and economists expect it will keep its benchmark interest rate at a 40-year low of 5 percent.
"We would expect, in particular because of what the rand has done since the previous meeting, and also owing to some escalation in the oil price, that the SARB could deliver a more hawkish tone. But we don't expect they are going to move on rates," said Standard Bank's Donald.
Yields on the government's benchmark 2026 bond dipped 4 basis points to 8.155 percent.
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