South Africa’s Rand flat ahead of Lending rate Decision

JOHANNESBURG – South Africa’s rand was little changed in early trading on Thursday ahead of a decision by the central bank on lending rates.

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At 0715 GMT the rand was 0.07% firmer at 14.7850 per dollar, having regained ground after sliding to a four-session low of 14.8670 on Wednesday, as consumer inflation growth was softer-than-expected, prompting a brief flurry of selling.

October price growth hit a 8-year low of 3.7% year-on-year against expectations of 3.9% largely due to lower fuel prices, prompting more bets that the central bank will take the opportunity to cut rates.

Some analysts warn that the South African Reserve Bank (SARB) will look through the inflation print and calls for a rate cut to support consumer spending and growth, and stick to its cautious approach that has seen it keep the rate unchanged for the last two meetings.

“The 1×4 FRA is now pricing in just under 50% chance of a rate cut. However, it should be noted that the dip down to 3.7% y/y in the headline number was, by and large, a function of transitory factors,” brokerage ETM Analytics said in a statement.

“Furthermore, risks cited by the SARB that prevented rate cuts in the past haven’t diminished.”

Bonds also opened flat, with the yield on the benchmark 2026 paper steady at 8.305%.


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