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Europe, Forex

S.African rand retreats as global inflation jitters cloud strong GDP data

* Graphic: World FX rates (Adds latest prices, analyst comments)

JOHANNESBURG, June 9 (Reuters) – South Africa’s rand dipped on Wednesday as caution ahead of U.S. inflation data and a European Central Bank policy meeting on Thursday eclipsed better-than-expected local economic growth.

At 1500 GMT the rand was 0.55% weaker at 13.6500 per dollar, it’s weakest level this week after resuming a slide that began on Monday on concerns about an early end to easy monetary conditions in the U.S. and Europe.

The high-yielding rand, which hit its strongest level in 28-months on Friday, is the top performing major emerging market currency this year, spurred by a boom in global commodity prices and the low-rate environment in developed markets.

Brighter than anticipated GDP data on Tuesday, showing a 4.6% quarter on quarter jump, partly masked the country’s deep fiscal woes and power supply challenges.

Investors have piled up bets against the dollar, but are growing nervous about whether the beginning of the end of enormous monetary stimulus is close. That has partly refocused attention to local issues, especially the slow roll out of vaccines.

“Admittedly, an EM-friendly market environment with ample liquidity, in which economic optimism and risk-on sentiment prevail, offers the rand further appreciation potential, said analyst at Commerzbank Elisabeth Andreae.

“However, assuming, as we do, that these rand-positive factors are already largely priced in, the air for the rand is likely to become thinner.”

Bonds extended gains, with the yield on the benchmark government issue down 2 basis points to 8.695%.

The Johannesburg Stock Exchange’s Top-40 Index closed down 0.03% at 61,433 points and the broader All-Share Index rose 0.05% at 67,681 points.

Dragging the blue-chip index down was new addition Thungela Resources, the thermal coal business spun off by Anglo American and valued at roughly $253 million when it listed on Monday.

It closed 11.26% lower on Wednesday.

(Reporting by Mfuneko Toyana; Editing by Kirsten Donovan)

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