S.Africa's rand strengthens vs dollar, stocks up

JOHANNESBURG (Reuters) - South Africa's rand strengthened against the dollar on Wednesday as risk aversion eased in late afternoon trade, boosting emerging market assets.

The rand traded at 7.2380/dollar at 1328 GMT, 0.49 percent firmer than its previous close of 7.2745 in New York on Tuesday.

"We opened flattish on the day and the rand strengthened during the course of the afternoon as risk aversion eased a little bit with improvements in equity markets," said Nigel Rendell, senior emerging markets analyst at RBC Capital Markets.

"Given that we've got the SARB meeting tomorrow, we wait and see what they say after that, presumably after they cut interest rates by 50 basis points," Rendell added.

The South African Reserve Bank will make an interest rate call on Thursday.

The market will focus more on Governor Gill Marcus' remarks on the economic outlook for the next 18 months, which is seen as more likely to move the rand and government bonds than a possible 50 basis point cut, which the market has already largely priced in.

"I think (a cut) will have no impact at all because it is widely anticipated in the financial market. People have talked about it for a while," Rendell said.

"It would be a major shock if they didnt cut rates or if they just cut by 25 basis points for example. That would probably cause a bit of a rally in the rand for sure but 50 is already in the price," he added.

Government bonds were firmer, having rallied in recent sessions on the hopes of a rate cut.