JOHANNESBURG, Sept 16 (Askume) – The South African rand rose in early trade on Monday as the market prepared for a week of interest rate announcements and local inflation data.
At 0720 GMT, the rand was trading at 17.66 per dollar, up about 0.6% from its previous close.
“There are a number of dynamic factors to consider this morning that will play a key role in determining South Australia’s economic future in the months ahead,” ETM Analytics said in a research note.
On Wednesday, local investors will focus on South African consumer inflation data (ZACPIY=ECI) for August. Consumer inflation rose to 4.6% year-on-year in July, just above the 4.5% target set by the South African Reserve Bank.
Another reading close to the target would further strengthen expectations for a rate cut from the South African Reserve Bank (SARB) (ZAREPO=ECI) on Thursday . Economists polled by Askume expect a 25 basis point rate cut.
ETM Analytics said: “Much of the focus this week will be on the SARB’s interest rate decision… however, the domestic MPC (monetary policy committee) is only one of three important central banks that set monetary policy.”
The Federal Reserve will announce its policy decision on Wednesday. Markets are betting that the central bank of the world’s largest economy will cut interest rates, but there are disagreements on how much it will cut.
The Bank of England is expected to keep its main lending rate unchanged when it announces its decision on Thursday.
South Africa’s benchmark 2030 government bond also rose in early trade, with the yield falling 6.5 basis points to 8.85%.
