The rand was marginally weaker against major currencies shortly before midday on Wednesday‚ but had regained some strength despite consumer inflation moderating in June‚ which has increased the prospect of an interest-rate cut on Thursday.
The consumer price index (CPI) slowed to 5.1% in June from 5.4% in May‚ less than the consensus expectation of 5.2% increase.
Analysts said the rand was expected to be range-bound as markets waited for policy statements from both the Reserve Bank and key global central banks on Thursday.
A lower CPI figure will make the Reserve Bank’s monetary policy committee decision on interest rates more difficult‚ said Rand Merchant Bank analyst Isaah Mahlanga.
SA’s growth outlook remained weak and the rand had strengthened since the committee last met‚ he said.
Consensus is for the Bank to leave the repo rate unchanged at 7%‚ but a surprise cut could weaken the rand as it would narrow the relative yield between local and international bonds.
Global investors are expected to trade cautiously ahead of Thursday’s policy statements from the European Central Bank (ECB) and the Bank of Japan‚ Dow Jones Newswires said.
At 11.30am the rand was at R12.9073 to the dollar from Tuesday’s R12.902‚ at R14.8873 to the euro from R14.9061 and at R16.8285 to the pound from R16.8216.
The euro was at $1.1535 from $1.1553.
Source: TMG Digital.