Rand weaker on less hawkish Sarb stance

The rand was weaker on Friday, a day after the central bank adopted a less hawkish tone at its monetary policy meeting.

Read: Sarb holds repo rate, defends mandate

At 1615 GMT, the rand traded at 13.75 per dollar, 0.5% lower than its previous close.

The South African Reserve Bank kept its benchmark repo rate unchanged at 6.75% on Thursday, as expected, but noted an improved near-term inflation outlook.

Its models now forecast just one interest rate increase by the end of 2021, thanks to lower expectations for global oil prices and a stronger rand prediction.

“Given policymakers’ change of heart, we now expect that they will keep their key rate on hold for the duration of 2019. Indeed, we think that attention will soon focus on the possibility of rate cuts,” Capital Economics said in a research note.

In fixed income, the yield on South Africa’s benchmark 2026 government bond rose 9.5 basis points to 8.895% on Friday, reflecting weaker bond prices.

Local equities rose in line with global markets, after a report suggesting there had been progress in resolving the trade dispute between the United States and China, South Africa’s biggest trading partner.

On the Johannesburg Stock Exchange, the Top-40 index gained 0.61% to 47 585 points, while the All-share index rose 0.55% to 53 731 points.

Among the top risers, Shoprite gained 2.05% to R190.07 and bourse heavyweight Naspers rose 0.62% to R3 062.52 rand.