JOHANNESBURG, March 25 (Reuters) – The South African rand strengthened on Thursday, as investors awaited the results of a central bank monetary policy meeting later in the day, where the regulator is expected to leave its policy rate unchanged.
At 0610 GMT, the rand ZAR = D3 traded at 14.9275 against the dollar, 0.35% firmer than its previous close.
Wednesday’s data showing consumer price inflation in February fell below the central bank’s 3-6% target range did little to change market expectations that the Monetary Policy Committee ( MPC) from the central bank will no longer cut interest rates, keeping the rate at 3.5%.
“Local markets have traded cautiously over the week so far, with the rand’s short-term price action being somewhat
confusing for market participants at both ends of the price brackets, ”Nedbank analysts said in a note.
“This scenario is likely to continue before the MPC,
despite the consensual expectation of an unchanged decision. “
Emerging market central banks have come under increasing pressure in recent weeks amid rising global yields, weakening currencies and mounting inflationary pressures, with policymakers in Brazil, Russia and Turkey announcing a hike. surprise cumulative rate of 300 basis points last week.
This is in addition to signs that an easing cycle in emerging market central banks that began in 2019 and was the longest easing cycle since the 2008 financial crisis and the 2010 euro crisis. – could come to an end.
South Africa’s economy contracted 7.0% last year despite the Reserve Bank’s cumulative 300 basis point cut in Reserve Bank interest rates to counter damage from pandemic-induced lockdowns .
In fixed income, with the yield on the benchmark government bond due 2030 ZAR2030 = was up 4.5 basis points to 9.485% in early trades.
(Reporting by Olivia Kumwenda-Mtambo; Editing by Rashmi Aich)
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