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THE rand was firmer against the dollar late on Thursday after the South African Reserve Bank raised interest rates 25 basis points to 7%.

The rand touched a best level of R15.2804 to the dollar shortly after the announcement.

The rand was also supported by dollar weakness after the US Federal Reserve kept interest rates unchanged on Wednesday.

At 3.31pm, the rand was trading at R15.3308 to the dollar from R15.6532 at Wednesday’s close. The rand was at R17.3517 against the euro from R17.5539 and at R22.1529 against the pound from R22.3120.

The euro was at $1.1320 from $1.1214.

The Fed indicated on Wednesday that it would not increase interest rates quite as sharply this year as previously indicated.

The Wall Street Journal dollar index, which tracked the dollar against a basket of other currencies, was down 0.7% on Thursday, Dow Jones Newswires reported.

This boosted riskier assets such as emerging markets currencies and weakened the dollar.

Investec’s chief economist, Annabel Bishop, said the rand strengthened from R16.24 to the dollar yesterday to R15.50 to the greenback today as the Federal Reserve’s Federal open market committee (FOMC) came out with a much more dovish statement than expected, leaving its target rate unchanged at 0.25% to 0.50% as expected, but with its dot-plot chart now forecasting only two rate increases this year instead of four.

The dollar is likely to weaken further this afternoon as markets open in the US, causing all emerging market currencies to strengthen as a result, potentially driving the rand towards R15.00 to the greenback, Ms Bishop said.