Rand, bonds weaker on inflation data

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.