South African Rand Firms On Ahead of U.S. Fed Rate

The South African rand edged higher on Wednesday, buoyed by stable domestic inflation figures and stronger-than-expected retail sales, as global markets turned their attention to the anticipated U.S. Federal Reserve interest rate decision later in the day.

As of 15:11 GMT, the rand was trading at 17.96 to the U.S. dollar, marking a 0.4% gain from Tuesday’s closing level.

The risk-sensitive currency had previously declined by over 1% on Tuesday amid heightened geopolitical tensions between Israel and Iran, which prompted investors to seek safe-haven assets. The rand remained under pressure for most of Wednesday before rebounding following positive economic data.

South Africa’s national statistics agency reported that consumer inflation held steady at 2.8% in May, matching economists’ expectations in a Reuters poll and remaining below the South African Reserve Bank’s target range of 3% to 6%.

According to Casey Sprake, economist at Anchor Capital, the inflation data bolsters the argument for a more dovish monetary policy stance at the central bank’s July meeting.

In another boost to sentiment, Statistics South Africa revealed that retail sales for April rose by 5.1% year-on-year—significantly exceeding the 3.1% growth forecast by analysts.

Meanwhile, the U.S. dollar slipped 0.2% against a basket of major currencies, as traders largely anticipated that the Federal Reserve would maintain current interest rates, particularly in light of ongoing tensions in the Middle East.

On the equities front, the Johannesburg Stock Exchange’s Top-40 Index (.JTOPI) closed up by 0.4%.

In the bond market, South Africa’s benchmark 2035 government bond weakened slightly, with the yield rising by one basis point to 10.12%.


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