The South African (SA) Rand was muted in early trade on Wednesday as investors awaited inflation data and a monetary policy decision later in the day, with the Central bank widely expected to raise interest rates.
The Rand traded at 16.2125 against the Dollar, down about 0.2% from its previous close.
Statistics SA is due to publish August inflation data. Analysts polled by Reuters expect annual inflation to accelerate to 4.5%, from 4.3% in July.
However, Nedbank economists forecast headline consumer inflation would remain unchanged at 4.3%, citing lower transport costs due to a decline in fuel prices.
As a net fuel importer, SA is heavily exposed to swings in global energy prices.
Later in the day, the SA (SARB) Reserve Bank will announce its policy decision, with the central bank widely expected to deliver a 25 basis point rate hike after leaving rates unchanged at its previous meeting.
“Inflation looks set to remain above the target for some time, our forecast suggests another 10 months. This is long enough to undermine policy credibility and unsettle inflation expectations,” Nedbank economists said in a note.
“The Rand’s impressive resilience will depend on the SARB hiking, or it will reverse,” ETM Analytics said in a note, adding there was plenty of room for disappointment should the central bank not raise rates.
SA’s benchmark 2035 government bond was steady in early deals, with the yield at 8.585%.
–Reuters–
