JOHANNESBURG: South Africa's rand slipped against a firm dollar on Wednesday as headline inflation rose to a 2015 peak in May, opening the door for further losses ahead of a U.S. Federal Reserve meeting.
At 1400 GMT the rand had weakened 0.55 percent to 12.4350 per dollar, closing in on the 12.50 technical point that could be breached as markets search the Fed's statement later in the session for clues on the timing of a rate hike.
"Overnight trade will definitely be a bit more exciting than what we've had in local business hours,' said analyst Christie Viljoen of NKC African Economics.
South Africa's headline consumer inflation quickened to 4.6 percent year-on-year in May, from 4.5 percent in April, in line with expectations, with a muted effect on the domestic currency as investors awaited Fed chair Janet Yellen's speech at 1800 GMT.
"The emphasis (of the FOMC statement) will be rates are going to rise and rise soon. I'm sure they also want to dampen expectations about growth," Vijoen added.
The dollar was firmer against most emerging market currencies on the day, around 0.4 firmer versus the Russia's rouble and 0.2 percent stronger against the Turkish lira.
Yields on local bonds rose, with the benchmark government paper due in 2026 adding 7.5 basis points to a year-high 8.485 percent.
Comments
Comments are closed for this article.