Rand loses shine amid apparent consolidation

The rand weakened slightly on Tuesday morning, in an apparent consolidation after strengthening fairly sharply recently.

Investec economist Annabel Bishop said the relative strength in the currency would help take pressure off the Reserve Bank, which is widely expected to leave interest rates unchanged when its monetary policy committee concludes a scheduled policy meeting on Thursday.

The Bank has previously considered a sustained deprecation in the value of the rand a threat to the inflation outlook, which it closely tracks when it decides on policy.

The rand has been at the mercy of the global developments, weakening sharply in the second quarter before staging a recovery in July.

Jitters over a trade war and further normalisation of monetary policy in the US via higher interest rates have contributed to the volatility in the rand exchange.

On a one-year view though, the rand was little changed on the trade-weighted basis, noted Bishop, adding that this carried more weight when assessing inflation dynamics.

Though headline inflation has picked up from its recent lows, it is well within the Bank’s 3%-6% target range.

Statistics SA will update inflation figures on Wednesday morning, with markets expecting headline inflation to have quickened to an annual rate of 4.8% in June, from 4.4% in May.

Local bonds were little changed in early trade, with the yield on the benchmark R186 fetching 8.695%, from 8.69%.

At 10.16am, the rand was at R13.2331 to the dollar from R13.2205. It was at R15.5234 to the euro from R15.4823, and R17.5175 to the pound from R17.4990 The euro was at $1.1730 from $1.1711.