Rand on back foot before inflation numbers, Fed

The rand weakened in early trade on Wednesday, before the release of domestic inflation data and a policy announcement by the US Federal Reserve.

At 0625 GMT, the rand traded at R17.73 against the dollar, about 0.3% weaker than its previous close.

Statistics South Africa is scheduled to release August consumer inflation numbers around 0800 GMT.

Economists polled by Reuters predict year-on-year inflation will dip to 7.5% from 7.8% in July, with the month-on-month reading falling to 0.1% from 1.5% previously.

The South African Reserve Bank targets inflation of between 3% and 6% and is expected to raise its main lending rate by another 75 basis points on Thursday to bring inflation back within its desired range.

Financial markets are positioned for a 75 basis point hike by the US Fed on Wednesday, with expectations for policy tightening boosting the dollar and weighing on emerging market currencies like the rand in the run-up to the announcement.

The South African government’s benchmark 2030 bond was little changed in early deals, with the yield down 0.5 basis points to 10.530%.