JOHANNESBURG, June 18 (Reuters) – The South African rand strengthened slightly in early trade on Wednesday as investors awaited key domestic economic data and a major interest rate decision from the U.S. Federal Reserve.
At 06:37 GMT, the rand traded at 17.9350 against the U.S. dollar, about 0.6% stronger than its close on Tuesday. The currency had dropped more than 1% the previous day as tensions between Israel and Iran drove investors toward safer assets, reducing demand for riskier emerging market currencies like the rand.
Despite showing some signs of stability, further gains are expected to be limited until after the Fed announces its interest rate decision later on Wednesday, said Andre Cilliers, currency strategist at TreasuryONE.
Before the Fed decision, investors focused on South Africa’s consumer inflation and retail sales figures. The inflation data is due at 08:00 GMT, followed by retail sales numbers two hours later. These indicators will offer insight into the health of Africa’s most industrialised economy.
A Reuters poll of economists suggests that annual consumer inflation held steady at 2.8% in May, while retail sales likely grew by 3.1% in April.
However, economists at Nedbank expect inflation to have slowed to 2.3% year-on-year in May. They forecast retail sales growth of 1.7%, supported by lower inflation, falling interest rates, and reduced debt service costs. These factors, they noted, have boosted real wages and consumer spending.
South Africa’s benchmark 2035 government bond was largely unchanged in early trade, with the yield easing 0.5 basis points to 10.105%.
