South African rand firms as focus shifts to inflation print next week
Updates prices as of 1400 GMT, adds analyst comment in paragraphs 4-5
JOHANNESBURG, Oct 18 (Reuters) -South Africa's rand firmed against a weaker dollar on Friday, ahead of a domestic inflation reading next week which could provide clues on the central bank's rate-cutting path.
At 1400 GMT, the rand traded at 17.57 against the dollar ZAR=D3, about 0.6% stronger than its previous close. The currency is still down about 1% against the greenback this week.
The dollar =USD last traded about 0.2% softer against a basket of currencies.
The rand's recovery on Friday can be attributed to a broader dollar retreat, said Danny Greeff, co-head of Africa at ETM Analytics.
"The market is stabilising after a period of dollar strength as bets on aggressive rate cuts in the U.S. were pared and a higher probability of a Trump presidential election victory was being priced in," Greeff added.
Next week, domestic investors will look to September's consumer inflation figures which could provide clues on the South African Reserve Bank's interest rate path.
The central bank cut its main lending rate for the first time in more than four years in September, after data showed headline inflation fell just below 4.5%, the middle of the central bank's target range.
On Thursday, South Africa's central bank governor Lesetja Kganyago said the country could move to a lower inflation target at little cost.
"One of the requirements for a stable currency is low inflation; therefore, any talk of lowering the inflation target should be mildly supportive of the ZAR," ETM Analytics said in a research note.
On the Johannesburg Stock Exchange, the blue-chip Top-40 index .JTOPI last traded about 0.5% higher.
South Africa's benchmark 2030 government bond ZAR2030= gained, the yield down 2.5 basis points to 9.28%.
Reporting by Tannur Anders; Editing by Hugh Lawson, Bhargav Acharya
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
