The rand continues its strengthening trajectory

The rand was stronger against the dollar today. Picture: Karen Sandison/Independent Newspapers

The rand was stronger against the dollar today. Picture: Karen Sandison/Independent Newspapers

Published May 22, 2024


The rand continued its strengthening trajectory following a brief consolidation during early trade yesterday.

By 12.15am the rand was 0.49% stronger at R18.1617.

The rand is trading just over 1.6% higher against the greenback for the week, at R18.06/$, while also making strides against the euro and pound to trade at R19.61/€ and R22.96/£.

For the second consecutive month, headline inflation, as measured by the Consumer Price Index (CPI), softened – declining to 5.2% year on yeare in April from 5.3% year on year in March - well above the central bank's preferred level of 4.5%.

This softening of core inflation was unsurprising, given the subdued demand in the economy, the low exchange rate pass through, and the relatively minor spillovers from elevated fuel and electricity prices.

Casey Sprake, an investment analyst of fixed income at Anchor Capital, said, “This latest print means that inflation has moved closer to the 4.5% midpoint of the SA Reserve Bank's target band of 3% to 6%, where it prefers to anchor expectations.”

Bianca Botes, a diirector at Citadel Global, said on Wednesday cautious commentary by US Federal Reserve officials this week, driving home the higher-rates-for-longer narrative, had received little attention from the currency markets, with the US Dollar Index trading 1.3% lower over the period of a month.

“The FOMC (Federal Open Market Committee) minutes will take centre stage today but are expected to hold little surprise in light of all the recent Fed speak. The data calendar picks up momentum today, in addition to the FOMC minutes we will keep an eye on UK CPI and PPI, local CPI and Chinese FDI (foreign direct investment) all due for release today,” she said.

Trading Economics said the JSE index was down for the second day on Wednesday, trading around 79635 points, mirroring a cautious mood across global markets ahead of the publication of the FOMC minutes later in the day.

Among single stocks, Redefine was the top loser, shedding over 4%. On the other hand, retailer Pick n Pay led the gains, up nearly 4%, after saying it concluded a debt restructuring agreement with its lenders.