Rand firms on Thursday

The rand was slightly stronger against a weaker dollar in early trade on Thursday, ahead of the central bank’s main interest rate decision, which most analysts expect to be a hold after 10 consecutive hikes.

At 0540 GMT, the rand traded at R17.84 against the dollar.

The dollar was down about 0.1% against a basket of global currencies.

The South African Reserve Bank will announce its main interest rate decision at 1300 GMT. It has been on a rate-hiking cycle since September 2021, raising the repo rate by a total of 475 basis points (bps).

Twelve out of 21 economists in a Reuters poll published last week expected that the bank would hold its rate at 8.25%, while nine economists predicted a 25 bps hike.

Consumer inflation data on Wednesday showed inflation fell to 5.4% year on year in June, down from 6.3% in May and back within the central bank’s target range of 3% to 6% for the first time in over a year.

“SA June inflation at 5.4% (was) lower than consensus but on our forecast. To us (this) affirms the Sarb MPC will not have to hike today,” said Rand Merchant Bank analysts in a research note.

South Africa’s benchmark 2030 government bond was slightly weaker in early deals, with the yield up 1 bp to 10.315%.