JOHANNESBURG (Reuters) -The South African rand strengthened on Tuesday against a weaker U.S. dollar, as global market sentiment was buoyed by expectations of interest rate cuts in 2024 and a local leading business cycle indicator came in line with expectations.
At 1605 GMT, the rand traded at 18.3200 against the dollar, 1.4% firmer than its previous close.
The dollar was last trading down 0.4% against a basket of global currencies, as traders sold the U.S. currency on expectations the Federal Reserve could start cutting rates as early as March.
South Africa’s composite leading business cycle indicator came in at 112.0 in October, showing a slight improvement from the previous month although it was still down over 3% year-on-year.
The indicator collects data on vehicle sales, business confidence, money supply and other factors to gauge the outlook for Africa’s most industrialised economy.
Analysts at ETM Analytics had said the indicator would likely stabilise month-on-month but still reflect a year-on-year contraction, confirming South Africa remains in an economic downturn.
The benchmark 2030 government bond was weaker, with the yield up 8 basis points at 9.730%.
Shares on the Johannesburg Stock Exchange rose, as the blue-chip Top-40 index closed up 0.7%.
(Reporting by Nellie Peyton; Editing by Alexander Winning and Tomasz Janowski)