Rand weakens on inflation spike

The rand was weaker at midday on Wednesday after the local consumer inflation figure for January came in worse than expected.

Inflation‚ as measured by the consumer price index (CPI)‚ accelerated to 6.2% from 5.2% in December — above market expectations of 5.9%.

At 11.25am‚ the rand was at R15.8222 against the dollar from R15.7941 previously. It weakened to R15.87 to the dollar after the inflation data was released earlier in the morning.

Against the euro‚ the rand was at R17.6339 from R17.6015 and was at R22.6191 against the pound from R22.5946 previously.

The euro was at $1.1146 from $1.1145.

TreasuryOne’s head of dealing‚ Wichard Cilliers‚ said the inflation data presented an outright risk for the rand.

"But it could be somewhat toned down as the market focus will be firmly on the (US) Federal open market committee (FOMC) minutes set to be released later in the day."

He said it could also send the rand towards the R15.90/$ level as traders started to go longer on the dollar ahead of the release of Federal open market committee minutes.

- TMG Digital/BDlive