Rand broadly stable after interest rate pause

The rand lost some ground on Friday as the US dollar surged, but was still set to end the week on a solid footing after inflation fell back within target and the central bank paused interest rate hikes.

At 1540 GMT, the rand traded at R17.95 against the dollar.

The dollar was up about 0.3% against a basket of global currencies.

“The rand is currently trading below its 200-day moving average and appears to be stabilising within a range of R17.75 to R18.00,” Andre Cilliers, currency strategist at TreasuryONE, said.

The next significant market event for the rand is expected to be the US Federal Reserve meeting next week, he added.

The South African Reserve Bank (Sarb) on Thursday held its interest rate steady at 8.25%, its first pause since November 2021.

That came after figures showed consumer inflation for June eased to 5.4%, back into the central bank’s target range of 3%-6%.

Central bank governor Lesetja Kganyago said the interest rate pause did not mean an end to the hiking cycle. But Rand Merchant Bank (RMB) analysts said the market was not pricing in further hikes.

“All told (the) rand continues to do extremely well,” they added in their research note.

Shares on the Johannesburg Stock Exchange closed lower with the benchmark all-share index down 0.25% and the blue-chip index of top 40 companies losing 0.32%.

South Africa’s benchmark 2030 government bond was stronger, with the yield down 2 basis points to 10.335%.