JOHANNESBURG: The South African rand was weaker in early trade on Wednesday, ahead of a local inflation print which could give hints on the future interest rate path of Africa’s most industrialised economy.
At 0642 GMT, the rand traded at 17.83 against the dollar, about 0.2% softer than Tuesday’s close.
“Today is all about local CPI (inflation) later this morning and the Fed (US Federal Reserve) minutes this evening,” said Rand Merchant Bank analysts in a research note. Investor focus will be on South Africa’s July inflation print set to be released at 0800 GMT for clues on the country’s future interest-rate path.
Inflation in June was at 5.1% year on year and within the central bank’s target range of 3% to 6%. The central bank likes to see inflation close to 4.5%, the midpoint of its target range.
Economists polled by Reuters expect South Africa’s central bank to cut interest rates for the first time in more than two years on Sept. 19.
South African rand softer ahead of leading indicator
“Ahead of CPI later this morning, we look for some consolidation after the big moves of late,” Rand Merchant Bank analysts added, referring to the rand.
Global markets will look to minutes of the Fed’s latest meeting for clarity on the rate-cut path of the world’s biggest economy.
South Africa’s benchmark 2030 government bond was slightly weaker in early deals, as the yield gained 1 basis point to 9.295%.
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