Rand Drops From 6-day High As South African Central Bank Trims Base Rate To 7%

The South African rand pares its previous sessions' gains against the US dollar during early New York trading on Thursday after the South African central bank decided to slash its key interest rate by 50 basic percentage point to 7 percent.

The rand reached a low of 8.074 against the US dollar by 9:45 am ET, down by more than 1.6 percent from a 6-day high of 7.9433 hit around 8:10 am. If the rand drops further, support is seen around the 8.10 level. The dollar-rand pair closed Wednesday's trading at 8.0754.

South Africa' central bank unexpectedly lowered its key interest rate to 7% from 7.5%, saying that the domestic economy is lagging behind the international developments. In its previous rate-setting session, which was in June, the central bank held its key rate unchanged at 7.5%.

Central bank Governor Tito Mboweni said there are encouraging signs that the global slowdown may have reached its lower turning point, although the speed and extent of the recovery are still subject to a high degree of uncertainty.