Rand steady after early losses yesterday

File Image: IOL

JOHANNESBURG – The rand steadied against the dollar in late afternoon trade yesterday, recovering from losses earlier in the session, as a rise in consumer price inflation (CPI) reduced prospects for further interest rates cuts.

At 5.15pm, the rand was trading at 12.5650 against the dollar, not far off its close of 12.5625 on Tuesday. It had earlier weakened to a session low of R12.7050.

South Africa’s CPI jumped to 4.5percent in April as a higher rate of value-added tax and a sharp increase in fuel prices wiped away the previous month’s dip in prices.

“The South African Reserve Bank has acknowledged the favourable trend in inflation and growth in the early months of 2018, lowering the repo rate by 25 basis points in March,” said Elize Kruger, an economist at NKC African Economics.

“However, given the forecast of an upward trend in consumer inflation from here onwards, we forecast no further interest rate cuts, but that interest rates could remain unchanged at this level for a prolonged period.”

The central bank is expected to keep rates unchanged at 6.5percent on Thursday, according to a survey of 25 economists.

On the JSE, Steinhoff Africa Retail (STAR) said yesterday that it had raised R18billion in funding from South African financial institutions.

The company said the funding was used to repay its shareholder funding of R16bn provided by Steinhoff International Holdings as part of STAR’s listing in September 2017. This facilitated the cancellation of all third-party guarantees related to the financing of the shareholder funding. The share price rose 2.22percent to R17.50.

South African gold miner AngloGold Ashanti said yesterday that it planned to cut 2000 jobs at its domestic operations as part of plans to cut costs.

AngloGold employs about 8200 people in South Africa, where mining companies have had to deal with the risk of volatile labour relations, rising costs, regulatory disruptions and technical issues.

“The restructuring will affect employees across the different categories and levels, including the region’s executive committee and senior management,” the company said in a statement.

The share price fell 1.92percent to R100.29.


Source: iol.co.za