JOHANNESBURG, March 17 (Reuters) - South Africa's rand lost steam on Thursday afternoon after holding near a four-month high in early trade as investors digested the U.S. Federal Reserve's rate hike.
Investors had widely expected a Fed hike would bring a correction in the rand, though soaring commodity prices due to the Russia-Ukraine war could help give support.
The rand is considered a riskier asset but with South Africa being a resource-led country, a rise in commodity prices, especially of gold, platinum and coal, strengthens the local currency, even though investors rush to the safe haven dollar during uncertain times.
The local currency had been steadily rising for the last few days, hitting a four-month high late Wednesday.
At 1525 GMT, the rand traded at 14.9559 against the dollar, 0.33% weaker than its close on Wednesday when it touched 14.9003.
Despite intermittent weakness, investors expect the rand will continue to firm up on higher commodity prices.
"I am still very bullish on commodities," Warrick Butler, chief trader at Standard Bank, wrote in a note.
"With the supply chain issues globally and the way the domestic economy is set up, the rand should still benefit from the terms of trade."
In fixed income, the yield on the benchmark 2030 government bond was down 4 basis points to 9.59%, reflecting firmer prices.
The local market continued its upward march driven by positive gains in mining and industrial companies.
The benchmark all-share index ended up 0.87% at 74,124 points and the blue-chip index of top 40 companies closed up 0.89% to 67,570 points.
The mining index which represents a range of gold and platinum group metal companies, rose 1.85% as both the yellow metal and platinum prices rose.
Reporting by Olivia Kumwenda-Mtambo and Promit Mukherjee; Editing by Vinay Dwivedi and by Toby Chopra
Source: Reuters