Rand firms after rates remain unchanged

The rand was marginally firmer on Wednesday after the SA Reserve Bank left interest rates unchanged as expected.

The Bank’s monetary policy committee opted to maintain the repo rate at 8.25%, the same level since May 2023 after a cumulative increase of 475 basis points since the start of the rate-hiking cycle in November 2021.

In a statement on Wednesday afternoon, governor Lesetja Kganyago said SA’s return to the inflation target had been slow and the most recent inflation numbers showed yet another delay on the way to its 4.5% objective.

Kganyago said global inflation pressures had persisted and global central banks were expected to cut rates at a slower pace and to start cutting later.

“With inflation risks skewed to the upside, the monetary policy committee emphasised the need for restrictive policies to manage inflation expectations,” IG senior market analyst Shaun Murison said.

“The rand saw a relatively muted reaction to the statement, though did move off its worst levels of the day against the US dollar shortly thereafter,” he said. “While in the short term the rand is looking oversold, the trend for the year remains that of depreciation against the majors.”

At 5.19pm, the rand had strengthened 0.38% to R18.8918/$, easing from its intraday worst of R19.0043/$. It had firmed 0.48% to 20.4429/€ and 0.37% to R23.8563/£. The euro was little changed at $1.0821.

The JSE tracked firmer global markets, with global investors awaiting the release of the US Federal Reserve’s preferred measure of inflation, the personal consumption expenditures (PCE) price index for February, due on Friday. The data will give insight into the path of inflation. Markets look to the core PCE price index, which the Fed considers a more accurate representation of consumer price pressures since it blends changes in spending patterns. Economists were looking for the index to hold at 2.8%, while the headline reading quickened modestly to 2.5%, Bloomberg reported.

The JSE all share gained 0.41% to 73,909 points and the top 40 0.4%. Industrials added 0.91%, retailers 0.59%, financials 0.37%, banks 0.3% and food producers 0.23%. Precious metals lost 0.32%, industrial metals 0.3% and resources 0.24%.

At 5.50pm, the Dow Jones industrial average was 0.59% firmer at 39,514 points. In Europe, the FTSE 100 was little changed, while France’s CAC 40 gained 0.32% and Germany’s DAX 0.54%.

Gold gained 0.51% to $2,189.49/oz, while platinum lost 0.9% to $894.4/oz. Brent crude was 0.16% firmer at $85.39 a barrel.