South African rand dips as investors monitor US-Iran talks, mull inflation spike

JOHANNESBURG: The South African rand edged lower in early trade on Thursday, with cautious traders tracking US-Iran ​peace talks while digesting domestic data which showed ‌a spike in April inflation as the effects of the war fed through into prices.

At 0751 GMT the rand traded ​at 16.5225 against the dollar , about 0.4% weaker ​than its previous close.

Iran said it was reviewing Washington’s ⁠latest position on ending the war after U.S. President Donald ​Trump suggested he was prepared to wait a few ​days to “get the right answers” from Tehran.

Like other risk-sensitive currencies, the rand often takes cues from global drivers. It has been at ​the mercy of global market sentiment since the ​start of the U.S.-Israeli war with Iran at the end of February.

Inflation ‌in ⁠Africa’s largest economy accelerated sharply in April, increasing the likelihood that the central bank will hike interest rates when it meets to assess its monetary policy stance next week.

Johann ​Els, chief ​economist at PSG ⁠Financial Services, said inflation is likely to reach 5% by mid-year.

Els added that ​he expects the South African Reserve Bank to ​raise ⁠interest rates by 25 basis points to limit second-round inflation effects.

On the Johannesburg Stock Exchange, the Top-40 index was ⁠last ​down 0.4%.

South Africa’s benchmark 2035 ​government bond also weakened in early deals, as the yield rose 7.5 ​basis points to 8.79%.