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Markets

South Africa's rand falls ahead of US CPI, local data

  • On the domestic front, investors await April mining and manufacturing figures due later in the day for clues on the health of the economy at the start of the second quarter.
10 Jun 2021

JOHANNESBURG: South Africa's rand weakened early on Thursday, pulling further away from a 28-month high hit last week, as investors looked to US inflation data and a European Central Bank (ECB) meeting later in the day to provide a spur for currency markets.

At 0631 GMT, the rand traded at 13.7475 against the dollar, 0.15% weaker than its previous close.

"I think the market has shifted away from a sell-on-rallies situation to one where the market is more in a position of indecision. Not quite a buy on dips either, given the constant supply of exporter dollars," Warrick Butler, chief trader at Standard Bank, said in a client note.

The high-yielding rand, which hit its strongest level in 28-months of 13.4150 on Friday, is the top-performing major emerging-market currency this year, spurred by a boom in global commodity prices and low-interest rate environment in developed markets.

Traders are waiting to see how US consumer price index data compare with last month's report which showed prices increased by the most in nearly 12 years in April. Economists polled by Reuters have estimated the CPI advanced 0.4% in May.

In Europe, an ECB policy decision is due at 1145 GMT. While the ECB is widely expected to keep policy settings steady, investors will be watching for any clues of an imminent slowdown to its bond-buying program.

On the domestic front, investors await April mining and manufacturing figures due later in the day for clues on the health of the economy at the start of the second quarter.