South African rand subdued as traders await inflation data

JOHANNESBURG: The South African rand was muted in early Monday trade, with investors holding back ​ahead of domestic inflation data expected to reflect ‌pressures from war in the Middle East.

The Reuters Iran Briefing newsletter keeps you informed with the latest developments and analysis of the Iran war. Sign up here.

At 0716 GMT the rand traded at 16.7150 against the dollar , little changed ​from its previous close.

Statistics South Africa will release ​April inflation data on Wednesday, with analysts ⁠polled by Reuters expecting it to accelerate to ​3.9% year on year, up from 3.1% in March.

ETM ​analytics said in a note that it sees domestic inflation heading towards 5% if oil prices remain buoyant and ​the local currency depreciates further.

As a net fuel ​importer, South Africa is heavily exposed to the spike in global ‌energy ⁠prices.

“The situation in the Middle East has already dragged on too long, and second-round inflationary pressures are now just a matter of time,” said ETM ​Analytics.

The statistics ​agency will ⁠also publish retail sales data on Wednesday, though analysts say the March figures ​are unlikely to show weakness as ​they predate ⁠the full escalation of the Iran war.

On the Johannesburg Stock Exchange, the Top-40 index was down 0.6% ⁠in ​early trade.

South Africa’s benchmark 2035 ​government bond was also weaker, with the yield up 7.5 basis ​points at 8.89%.