South African rand slips in early trade; CPI and rate decision this week’s focus

JOHANNESBURG, July 17 (Reuters) – South Africa’s rand was slightly weaker in early trade on Monday, with the main focus on this week’s local inflation data on Wednesday and an interest rate announcement on Thursday.

At 0640 GMT, the rand was trading at 18.1025 against the dollar, about 0.1% weaker than the previous close.

The rand gained nearly 4% against the US currency last week, bolstered by bets that the US Federal Reserve will raise interest rates just one more time as inflation in the world’s biggest economy cools.

The rand was at one stage on track for bigger gains, but it lost about 1% on Friday as traders booked some gains and as prolonged power outages weighed on mood. to the investor.

Rand Merchant Bank said in a rand morning briefing that continued profit-taking and lackluster economic data in China weighed on the rand in early trade.

“Locally, everyone is looking ahead to the MPC (monetary policy committee) on Thursday,” RMB added.

The majority of economists polled by Reuters predicted that the South African Reserve Bank (SARB) would leave its main interest rate (ZAREPO=ECI) unchanged at 8.25%, although it was a close call on a a significant minority expected another 25-basis-point. hiking.

The June Consumer Price Index (CPI) data on Wednesday (ZACPI=ECI), (ZACPIY=ECI) may influence SARB’s thinking.

The Rand Merchant Bank forecast a deceleration in headline inflation to 5.4% year on year in June from 6.3% in May, which would return inflation within the SARB’s 3%-6% target band for the first time since April 2022.

“A figure in our forecast will help to see no increase from the SARB and confirm our forecast that inflation will average 5.9% this year, ie, within the target band,” said analysts in RMB.

Reporting by Tannur Anders Editing by Alexander Winning

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