South African rand firms to 13-mth high ahead of key US inflation reading
Updates prices to reflect afternoon trade
JOHANNESBURG, Aug 29 (Reuters) -The South African rand firmed on Thursday to its strongest level in 13 months, buoyed by the return of risk appetite to financial markets ahead of key U.S. inflation data which could solidify rate cut bets in the world's biggest economy.
At 1546 GMT the rand traded at 17.7675 against the dollar ZAR=D3, about 0.38% stronger than its previous close. It hit 17.6775 to the greenback earlier in the day, its best performance since late July 2023.
The dollar index =USD, measuring performance against a basket of currencies, was last up 0.36%, after data showed the U.S. economy grew a little faster than expected in the second quarter.
Globally, markets will look to key U.S. Personal Consumption Expenditures (PCE) price index on Friday, the Federal Reserve's preferred measure of inflation. If the inflation report is positive, it is another argument in favour of cutting interest rates in September.
Like other emerging market currencies, the rand often takes cues from global drivers in addition to local factors.
South Africa's producer inflation ZAPPIY=ECI fell to 4.2% year on year in July from 4.6% in June, statistics agency data showed on Thursday.
Local investors will now shift focus to July money supply, trade and budget balance data on Friday.
On the Johannesburg Stock Exchange, the blue-chip Top-40 index .JTOPI closed about 0.34% up.
South Africa's benchmark 2030 government bond ZAR2030= was slightly stronger, as the yield slipped 0.5 basis point to 9.135%.
Reporting by Bhargav Acharya and Tannur Anders
Editing by David Goodman, William Maclean
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