JOHANNESBURG: South Africa’s rand strengthened in early trade on Wednesday, as investors await the US Federal Reserve’s policy decision later in the day that could give clues on future interest rate hikes.

At 0642 GMT, the risk-sensitive rand traded at 18.1550 against the dollar, 0.25% stronger than its previous close.

The dollar index, which measures the greenback against six rivals, was last down 0.12% at 111.35.

Markets widely expect the Fed to raise its benchmark overnight interest rate by 75 basis points but the focus will be on its commentary on inflation and any clues on the pace of future rate hikes.

“The Fed will hike by a further 75bp today and will signal more to come, but probably at a slower pace,” ETM Analytics said in a research note.

South African rand weakens as Fed decision looms

The South African government’s benchmark 2030 bond was stronger in early deals, with the yield down 4 basis points to 10.770%.