The rand was trading within a firmer range on Thursday morning following the release of domestic inflation data and US Federal open market committee minutes‚ which increased investors’ appetite for risk.
At 9.40am‚ the rand was at R15.4808 against the dollar from R15.4718 previously. On Wednesday morning the rand traded between R15.79 and R15.82.
Against the euro‚ the rand was at R17.2544 from R17.2197 and was at R22.1128 against the pound from R22.1113 previously.
The euro was at $1.1145 from $1.1128 previously.
On Wednesday‚ Statistics SA released consumer price index data for January which showed inflation accelerated at 6.2% year on year compared with 5.2% in December. It was the highest rate in 17 months‚ but was within the Reserve Bank’s expectations.
The data also showed that inflation had breached the 3%-6% target band‚ indicating that more and larger interest rate hikes are looming.
Rand Merchant Bank analysts said ordinarily higher inflation led to a weaker currency.
"However‚ expected interest rate hikes as a result of the breach pushed the rand to its strongest levels against the dollar since the beginning of January. The bigger positive factor for the rand was market perception that the Fed will back off from its policy path given its concern about global growth‚" the analysts said.
The Federal open market committee’s January statement showed that most of its members were concerned about the deterioration of US and global market conditions.
Several members highlighted the increased downside risks of tightening monetary policy‚ so the expectation of another US rate hike in March is dwindling.
- TMG Digital/BDlive
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