JOHANNESBURG: The South African rand remained largely unchanged against the US dollar on Thursday as investors awaited key domestic mining production data, while softer-than-expected US inflation eased expectations of a Federal Reserve interest rate hike next month.
The rand traded at 16.1625 per US dollar in early trade, with market sentiment supported by signs of moderating inflation in the United States despite concerns over South Africa’s economic outlook.
Why is the rand holding steady?
Investor sentiment improved after US consumer price data showed inflation rose by 0.1% in July, reducing expectations of a Federal Reserve rate increase and supporting risk-sensitive currencies such as the rand.
Markets are also awaiting South Africa’s June mining production figures, which are expected to provide fresh insight into the performance of Africa’s largest economy.
What are investors watching in South Africa?
Economists expect mining output to decline for a second consecutive month after contracting 5.4% year-on-year in May, citing elevated production costs and weaker commodity prices despite some moderation in fuel costs.
Meanwhile, South Africa’s benchmark 2035 government bond weakened in early trading, with the yield rising to 8.425%, while the Johannesburg Stock Exchange’s Top-40 index fell 0.9%.