The rand strengthened against a softer dollar on Thursday as investors digested a US inflation reading that largely met expectations, while looking past hotter-than-expected domestic producer inflation data.
In late afternoon trade, the rand was at 16.45 against the dollar, up roughly 0.7% from its previous close.
Dollar slides
The greenback slipped about 0.3% against a basket of currencies after the release of the US personal consumption expenditures price index, which eased some concerns about imminent Federal Reserve rate hikes.
Like other risk-sensitive currencies, the rand often takes cues from global drivers, in addition to domestic economic data.
Producer inflation exceeds expectations
Data on Thursday showed that South Africa’s producer inflation quickened to 7.8% year-on-year in May from 4.8% in April, exceeding Reuters economists’ expectations of 6.7%.
“The rise was primarily driven by higher fuel costs, as the blockage of the Strait of Hormuz kept oil prices higher, lifting diesel and petrol prices,” said Nedbank economists in a note.
On the Johannesburg Stock Exchange, the Top-40 index closed up more than 1%.
South Africa’s benchmark 2035 government bond also strengthened, as the yield fell 7.5 basis points to 8.21%.
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- The South African rand strengthened by about 0.7% against the US dollar, reaching 16.45, supported by a softer dollar after US inflation data met expectations.
- The US dollar slipped 0.3% against a basket of currencies following the US personal consumption expenditures price index release, easing fears of imminent Federal Reserve rate hikes.
- South Africa's producer inflation surged to 7.8% year-on-year in May, well above forecasts, driven mainly by higher fuel costs linked to the Strait of Hormuz blockade.
- Despite hotter domestic inflation data, the rand benefited from positive global risk sentiment and closely followed global economic drivers.
- The Johannesburg Stock Exchange Top-40 index rose over 1%, while the 2035 government bond yield dropped 7.5 basis points to 8.21%.
In late afternoon trade, the rand was at 16.45 against the dollar, up roughly 0.7% from its previous close.
Like other risk-sensitive currencies, the rand often takes cues from global drivers, in addition to domestic economic data.
Data on
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On the Johannesburg Stock
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