Economy 1 MIN READ

South Africa’s rand firms, central banks in focus

May 13, 2022By Reuters

South Africa’s rand firmed in early trade on Friday, extending gains made in the previous session despite a stronger dollar and data pointing to continued weakness in the domestic economy.

At 0540 GMT, the rand ZAR= was trading at 15.9900 against the dollar, 0.67% firmer than its previous close.

The currency stayed resilient against the dollar, which remains near 20-year highs, and was not largely moved by data released on Thursday showing that March mining output fell more than expected, and manufacturing production also declined year-on-year.

Market participants are now awaiting South Africa’s Reserve Bank monetary policy committee meeting next week.

A Reuters poll forecasted that the central bank is set to make its first 50 basis point hike to its repo rate in more than six years on Thursday, taking it to 4.75%, to prevent potential second-round effects from higher consumer prices.nL5N2X398J

A hike could support the rand, at a time when investors are also assessing how aggressive the U.S. Federal Reserve policy path will be after it raised its benchmark overnight interest rate by 50 basis points last week.

(Reporting by Olivia Kumwenda-Mtambo; Editing by Subhranshu Sahu)

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