South African rand slips ahead of interest rate decision

JOHANNESBURG, March 20 (Reuters) - South Africa's rand weakened early on Thursday, ahead of a much anticipated interest rate decision by the South African Reserve Bank (SARB).

At 0715 GMT, the rand traded at 18.1750 against the dollar ZAR=D3, about 0.3% weaker than its previous close.

The dollar =USD last traded up about 0.2% against a basket of currencies as markets digested the U.S. Federal Reserve's decision to hold interest rates steady and lower the nation's growth forecast on Wednesday.

The risk-sensitive rand has been rocked by national budget deadlock, tensions with the U.S. and uncertainty over President Donald Trump's tariffs, but investor focus will be pinned on the SARB's rate decision later on Thursday for clues into the health of Africa's most industrialised economy.

Economists polled by Reuters expect the central bank to hold rates steady, citing abundant risks.

However, some analysts believe that a rate cut could support the rand and boost sentiment, after inflation came in lower than expected on Wednesday.

"After the difficulties in presenting the budget, a cut in the key interest rate would be a positive signal to the economy that the structural reforms undertaken so far are taking effect," Commerzbank analyst Volkmar Baur said in a research note.

On the stock market, the Top-40 .JTOPI index was last trading around 0.2% lower.

South Africa's benchmark 2030 government bond ZAR2030= was slightly stronger in early deals, with the yield down 1 basis point at 9.075%.