US CPI Release Weakens South African Rand Against Dollar

(CTN News) – Rand prices (CPI) fell on Wednesday as the dollar gained strength after data showed U.S. inflation rose in March. This dampened hopes that the Federal Reserve would reduce interest rates in June due to the data.

It is estimated that the rand traded at a rate of 18.77 per dollar at 1557 GMT, which is 1.68% weaker than it had traded at its previous close of 18.84 the previous day.

According to the consumer price data released by the U.S. Department of Labor on Thursday, The Consumer Price Index (CPI) grew by 0.4% on a monthly basis and by 3.5% on an annual basis in March, above the forecasts of economists polled by Reuters.

In the wake of the inflation CPI report, the dollar index jumped sharply. The dollar index was last trading up about 1.00 percent against a basket of global currencies as a result.

As far as economic data releases are concerned, there are none scheduled in South Africa until Thursday, when the figures for February’s gold and mining production will be released.

An opinion survey conducted by CPI earlier on Wednesday showed that the African National Congress was supported by 37% of voters in the run-up to the general elections just over six weeks from now.

Market uncertainty has also contributed to Rand weakness.

On Friday, stock market prices ended near their CPI previous levels, with both the Top-40 indices and the all-share indices closing close to their previous levels.

A weaker performance was recorded by the benchmark 2030 government bond in South Africa, with the yield increasing by seven basis points to 10.560%, which was the highest level in five years.

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