South African rand dips as investors monitor US-Iran talks, mull inflation spike
- The rand traded at 16.5225 against the dollar , about 0.4% weaker than its previous close
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%.
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