JOHANNESBURG: The South African rand weakened in early trade on Wednesday, before the release of domestic inflation data and a policy announcement by the US Federal Reserve.

At 0625 GMT, the rand traded at 17.7300 against the dollar, about 0.3% weaker than its previous close. Statistics South Africa is scheduled to release August consumer inflation numbers around 0800 GMT.

Economists polled by Reuters predict year-on-year inflation will dip to 7.5% from 7.8% in July, with the month-on-month reading falling to 0.1% from 1.5% previously.

The South African Reserve Bank targets inflation of between 3% and 6% and is expected to raise its main lending rate by another 75 basis points on Thursday to bring inflation back within its desired range.

South African rand near lowest since 2020 as markets brace for Fed

Financial markets are positioned for a 75 basis point hike by the US Fed on Wednesday, with expectations for policy tightening boosting the dollar and weighing on emerging market currencies like the rand in the run-up to the announcement.

The South African government’s benchmark 2030 bond was little changed in early deals, with the yield down 0.5 basis points to 10.530%.