South Africa’s (SA) Rand was steady in early trade on Monday ahead of this week’s monetary policy decision from the SA Reserve Bank, with higher oil prices and elevated risk aversion limiting its ability to benefit from a softer United States (US) Dollar.
The Rand traded at 16.54 against the Dollar, little changed from its previous close of 16.52.
Oil prices jumped about 3% on Monday, with Brent crude prices surpassing $90 per barrel, as escalating US and Iran hostilities in the Middle East restricted oil shipments through the Strait of Hormuz.
The Dollar was also steady against a basket of currencies as demand for safe-haven assets amid US and Iran tensions was offset by expectations that the Federal Reserve will keep interest rates unchanged in July.
Market analysts say the rand is looking to the central bank for direction as it struggles to capitalise on a subdued Dollar.
Domestically focused investor attention will be pinned on June CPI on Wednesday and the central bank’s rate decision on Thursday.
ETM Analytics expects annual consumer inflation to accelerate to around 4.9% in June from 4.5% in May, driven largely by higher transport costs.
“On balance, another 25bp increase appears justified, especially because the SARB’s May projection already indicated one hike this quarter and its prolonged Hormuz scenario required additional tightening,” said ETM Analytics.
SA’s benchmark 2035 government bond was weaker in early deals, as the yield rose 5.5 basis points to 8.59%.
–Reuters–
