Views Article – Sharenet Wealth

Africa, Forex

South African rand strengthens as inflation quickens

(Updates rand to reflect afternoon trade)

JOHANNESBURG, Oct 20 (Reuters) – The South African rand advanced on Wednesday, bolstered by data showing consumer price inflation quickened slightly to 5.0% last month.

At 1602 GMT, the rand traded at 14.4325 against the dollar, roughly 0.7% stronger than its previous close.

Although the rise in the consumer price index in September was in line with analysts’ forecasts, for some traders it served as further evidence that pressure is building on the central bank to raise interest rates.

The South African Reserve Bank (SARB) has kept its main lending rate on hold at a record low of 3.5% for its past seven monetary policy meetings, lagging other emerging market central banks like those of Russia and Brazil which have tightened policy substantially.

The SARB has been able to keep its stance accommodative to support an economic recovery from the COVID-19 pandemic, as inflation has not risen above its target range of between 3% and 6%. But after it highlighted inflation risks in a recent monetary policy document, market bets for a rate hike at its November meeting grew.

Economists polled by Reuters predict a later lift-off in the repo rate, coming in the first quarter of next year.

Johannesburg-listed stocks closed slightly firmer on Wednesday, with the Top-40 index ending up 0.26% and the All-share index up 0.18%.

The biggest gainers on the blue-chip index included tech investor Prosus and AngloGold Ashanti, while fallers included retailers Mr Price and Woolworths .

(Reporting by Alexander Winning and Promit Mukherjee, Editing by William Maclean)

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