Johannesburg - South Africa's rand pared some of its earlier losses against the dollar on Thursday after the central bank kept domestic interest rates unchanged, but sounded a hawkish tone, warning about inflation pressures.
Stocks were barely changed amid a mixed market, with volumes down because of the US Thanksgiving Day holiday.
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The rand was trading at 14.1625 to the dollar by 15h49 GMT, down just 0.16 percent from Wednesday's close, having been at 14.2375 before Reserve Bank Governor Lesetja Kganyago began his speech.
On the debt market, government bonds appeared little moved by the policy statement, with the yield for the 10-year benchmark ending the day at 9.035 percent, where it was before the speech, although this was up 4.5 basis points from Wednesday.
Kganyago said the rand had been given support by a generally improved trade account in recent months, but would remain sensitive to changes in the stance of US monetary policy.
It would also be sensitive to sovereign ratings reviews due on Friday and next week, he added, although some analysts said this would likely take a back seat to market reaction to US rate expectations.
“A Fed rate hike and potential for a more aggressive Fed rate hike rhetoric will be the bigger factor at play here,” BNP Paribas Securities analyst Jeffrey Schultz said.
On the bourse, the benchmark Top-40 index ticked 0.01 percent lower to 44,082 points while the All-Share index dipped 0.11 percent to 50,561 points.
The banking sector led the bourse lower dropping 2.05 percent as some investors booked profits after gains this week.
“A bit of profit taking and perhaps some investors deciding that they would rather be lighter or out of the market over the holiday,” said Global Trader head of trading Nilan Morar.
Standard Bank fell 1.82 percent to R150.10, Nedbank Group dropped 1.89 percent to R226.51 and FirstRand Limited stumbled 2.50 percent to R50.31.
Trading was slow, with around 214 million shares changing hands compared with last year's daily average of 296 million shares.
REUTERS