Rand, bonds weaker on in­fla­tion data

The Star Early Edition - - PRICES -

THE RAND ex­tended losses against the dol­lar yes­ter­day and gov­ern­ment bonds weak­ened af­ter data showed in­fla­tion rose last month, but not enough to change ex­pec­ta­tions that the cen­tral bank would loosen mone­tary pol­icy this year.

The rand weak­ened to a ses­sion low of R13.1375 to the dol­lar af­ter the in­fla­tion fig­ures were re­leased, com­pared with its overnight close on R13.07 on Tues­day.

Head­line con­sumer in­fla­tion rose slightly to 5.4 per­cent year-onyear last month from 5.3 per­cent in April, data from Sta­tis­tics SA showed.

“The big pic­ture is that in­fla­tion re­mained within the South Africa Re­serve Bank’s tar­get range. The slight in­crease in in­fla­tion recorded in May is very small by com­par­i­son with the sus­tained slow­down since De­cem­ber 2016,” Cap­i­tal Eco­nom­ics Africa econ­o­mist, John Ash­bourne, said.

This week the rand has also been hit by a row over the cen­tral bank’s in­de­pen­dence, trig­gered by Pub­lic Pro­tec­tor Busi Mkhwe­bane’s call that the reg­u­la­tor’s man­date of main­tain­ing cur­rency and price sta­bil­ity be changed so that it can fo­cus on eco­nomic growth.

Mean­while, stocks gained, led by gold shares as bul­lion prices rose. The bench­mark JSE Top40 in­dex was up 0.54 per­cent at 45 213.45 points and the broader all share in­dex rose 0.47 per­cent to reach 51 402.69 points.

Gold shares, that have fallen since the gov­ern­ment raised the min­i­mum thresh­old for black own­er­ship of min­ing com­pa­nies to 30 per­cent from 26 per­cent last Thurs­day, took a breather yes­ter­day as bul­lion prices rose.

Gold Fields gained 3.1 per­cent to close at R45.30.

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