Monday, 17 August 2015 23:06
JOHANNESBURG: South Africa’s rand weakened on Monday as pressure on the currency mounted before local inflation numbers and minutes of a policy meeting by the U.S. Federal Reserve.
At 1530 GMT, the rand slipped 0.44 percent to 12.8825 per dollar, up from the 14-year low of 12.9225 reached earlier in the session.
The rand tumbled over 2 percent against the dollar last week, after a surprise decision by China’s central bank to weaken its currency. The rand is expected to come under more pressure from inflation and retail figures for July due on Wednesday.
A Reuters poll predicts consumer prices will rise 5 percent, accelerating from an annual 4.7 percent rate in June. That would take it closer to the central bank’s upper limit of 6 percent.
“There is little evidence of demand-led inflation pressures which can be influenced by interest rates,” Annabel Bishop of Investec said, suggesting the South African Reserve Bank’s next move would hinge on the timing of a rates liftoff by the U.S. central bank.
The Fed releases minutes its latest policy meeting on Wednesday. Expectations that it will raise rates in September diminished after China devalued its yuan.
“When U.S. Fed will start raising interest rates remains the most pressing issue given South Africa and several other emerging countries’ large current account deficits,” analysts at NKC African Economics said.
Yields on bonds edged up, with the benchmark issue due in 2026 adding 0.5 basis points to 8.22 percent.
