The rand was firmer at lunchtime on Wednesday after the consumer price index (CPI) moderated in line with expectations and the current account deficit narrowed sharply.
The CPI eased to 6.3% in February‚ 0.3 of a percentage point lower than the corresponding annual rate of 6.6% in January‚ Statistics SA said on Wednesday.
Xtrade chief market analyst Paul Sirani said although this was the second month of disinflation‚ 6.3% was still in the “danger zone”‚ above the South African Reserve Bank’s target range of 3%-6%. This could dampen confidence for Africa’s largest economy‚ he said.
During the fourth quarter‚ the current account deficit narrowed to 1.7% of GDP from 3.8%‚ exceeding expectations‚ with export growth outstripping that of imports.
Prior to the release of the CPI and current account deficit data‚ Rand Merchant Bank analyst Isaah Mhlanga said that a narrowing current account deficit and the lower inflation should help the rand minimise losses for the day. He said markets seemed to be in risk-off mode on concern that the US Republican party would not be able to pass the Affordable Health Care Act on April 28.
At 12.49pm‚ the rand was at R12.6217 to the dollar from R12.6716‚ at R13.6224 to the euro from R13.7121 and at R15.7278 to the pound from R15.8241.
The euro was at $1.0792 from $1.0807.
- TMG Digital/BusinessLIVE
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