Johannesburg - The rand was largely unchanged on Wednesday ahead of a central bank decision on interest rates in the United States that investors will watch closely for hints on the future pace of policy easing by the Federal Reserve.
At 08:45, the rand had inched up 0.25% to R14.32/$, little changed from New York close at R14.30.
The US Federal Reserve is set to keep interest rates unchanged, pushing back any increases until September or December, but a hawkish tone on the economy could pressure rand.
A technical analysis suggests the rand is slightly overbought and is seen edging back to R14.45/$.
The blue chip Top-40 futures index is up 0.46%, indicating the bourse will open firmer at 09:00.
Government bonds extend their rally, with the yield on paper maturing in 2026 shedding six basis points to 8.69%.
The rand is at its strongest it has been in 12 months against the pound and since 7 December 2015 against the euro. "(This is) a good opportunity to see London and maybe Brussels before they fundamentally change," said RMB analyst Isaah Mhlanga on Wednesday.
He said that RMB expects the Fed to indicate caution over the possible spillover effects from Brexit, but still keep the door open for a hike in September or December.
"Indeed, this stance should not be surprising given that there have been too few data releases to properly judge the extent of the fallout on the real economy," he said.
"If the Fed is hawkish, expect the rand to trend higher, however, if the tone is extreme caution, the rand could move lower, more so as the BoJ is expected to embark on more stimulus on Friday."
Umkhulu Consulting's Adam Phillips said emerging market currencies weakened on Tuesday as operators squared up for the end of the Fed meeting on Wednesday evening.
"It is becoming a bit boring, but it looks like Fed chair Janet Yellen will quite happily sit on the fence again and there is little chance of rates moving up," he said.