South African rand falls ahead of interest rate decision

An employee counts mixed denomination rand currency notes at the Forex department inside a First National Bank (FNB) branch in Johannesburg, South Africa. Photographer: Nadine Hutton, Bloomberg.

An employee counts mixed denomination rand currency notes at the Forex department inside a First National Bank (FNB) branch in Johannesburg, South Africa. Photographer: Nadine Hutton, Bloomberg.

Published Jul 21, 2022

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South Africa's rand weakened against the dollar in early trade on Thursday, as investors awaited the outcome of a central bank monetary policy meeting later in the day.

At 09:25 am, the rand traded at 17.1900 against the dollar, 0.22% weaker than its previous close.

The South African Reserve Bank (SARB) will announce its repo rate decision at around 1300 GMT.

A Reuters poll published last week predicted the bank would raise its benchmark interest rate by 50 basis points to 5.25% as it tries to rein in inflation.

On Wednesday, data showed headline consumer inflation quickened more than forecast to 7.4% year on year in June, versus analysts' predictions for 7.2% and a reading of 6.5% in May.

"Monetary tightening by the SARB will primarily be aimed at anchoring inflation expectations and keeping up with the global wave of monetary tightening to avoid a further rand blowout and financial market instability," ETM Analytics said in a research note.

On the stock market, the Top-40 and the broader all-share indexes opened slightly lower.

The government's benchmark 2030 bond was weaker in early deals, with the yield up 3.5 bps at 10.985%.

Reuters