South African rand shrugs off local data, falls 1% as dollar strengthens
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The South African rand weakened on Wednesday, trading at 16.8475 to the dollar at 1417 GMT, after local inflation and retail sales figures failed to support the currency. Reuters said the move came as the dollar strengthened and oil prices jumped more than 4%, keeping inflation concerns alive.
Key South African export prices also moved against the currency, with gold down 3.2% and platinum down 4.5% on the day. Analysts said the rand remained under pressure because higher oil prices could lift inflation in South Africa, which is a net energy importer.
South Africa’s annual inflation eased to 3% in February, matching the central bank’s target and coming in below the Reuters economist forecast of 3.1%. Retail sales also beat expectations, rising 4.2% year on year in January versus a Reuters poll estimate of 2.5%.
Despite the stronger domestic data, the rand failed to benefit as global forces dominated trade. The Johannesburg Stock Exchange Top-40 index was down 2.8%, while the benchmark 2035 government bond weakened, with the yield rising 15 basis points to 8.945%.
The dollar was also 0.3% higher against a basket of currencies as investors waited for the U.S. Federal Reserve’s rate decision later in the day, with policymakers widely expected to leave rates unchanged. That kept broader pressure on risk-sensitive currencies such as the rand.
