South African rand slips before key interest rate decisions

JOHANNESBURG, Jan 28 (Reuters) - The South African rand slipped on Wednesday, as investors awaited interest rate decisions from the United States and Africa's most industrialised economy.

At 1524 GMT, the rand traded at 15.9550 against the dollar ZAR=D3, roughly 0.6% down on Tuesday's close.

The U.S Federal Reserve is set to deliver its first monetary policy decision of 2026 later on Wednesday.

"Monetary policy proved contentious throughout 2025, with the central bank reluctant to lower rates in the wake of US President Donald Trump's April tariff turmoil until the latter half of the year," said ETM Analytics said in a research note.

"Ultimately, the Fed delivered three 25bp cuts, lowering the policy rate by 75bp to 3.75% from 4.50%, amid growing concerns over a weakening labour market," ETM Analytics added.

Wichard Cilliers, head of market risk at TreasuryONE, said markets expect the Fed to keep rates on hold and will be watching for clues on the pace and timing of future cuts.

The rand, like other risk-sensitive currencies, often takes cues from global drivers such as U.S. policy.

Investor focus will pivot to South Africa's first interest rate announcement ZAREPO=ECI of 2026 on Thursday, with 18 of 26 analysts polled by Reuters expecting the central bank to leave its repo rate unchanged, and eight predicting a 25 basis point cut to 6.50%.

Nedbank economists said in a research note that the monetary policy committee will leave the repo rate unchanged at 6.75%.

"We think the MPC will prefer to hold, given that inflation has risen above its 3% target and the SARB's November forecast pointed to some near-term stickiness," the economists said.

Other domestic releases this week include producer inflation ZAPPIY=ECI numbers on Thursday, while money supply ZAM3=ECI, private sector credit ZACRED=ECI, trade balance ZATBAL=ECI and budget balance ZABUD=ECI figures are all due on Friday.

On the Johannesburg Stock Exchange, the Top-40 index  .JTOPI closed up 1.5%. South Africa's benchmark 2035 government bond ZAR2035= was firm, with the yield falling 5 basis points to 8.06%.