JOHANNESBURG (Reuters) -The South African rand recovered some losses it incurred earlier on Wednesday after local inflation data showed a rise in prices for the second consecutive month.
At 1518 GMT, the rand traded at 18.1300 against the dollar, 0.19% stronger than its previous close.
Inflation in Africa’s most industrialised economy rose 7.1% year-on-year in March, driven by a steep increase in food prices, Statistics South Africa said.
The reading was a surprise as analysts polled by Reuters had predicted a drop in March to 6.9%.
The South African currency, which has been on a downward path for the better part of the year, slumped more than 0.8% after the announcement, before regaining some ground.
The earlier weakness in the rand was also due to a stronger dollar and lower export commodity prices, said Shaun Murison, senior market analyst at IG.
Inflation numbers are closely watched for their implications for the South African Reserve Bank’s monetary policy.
The central bank has raised interest rates nine times in a row since November 2021 in a bid to tame inflation, with last month’s hike a bigger-than-expected 50 basis points.
Separately, South African retail sales fell 0.5% year-on-year in February after falling by 0.8% in January, data showed.
Shares ended lower on the Johannesburg Stock Exchange, with both the blue-chip Top-40 index and the broader all-share index closing around 0.6% lower.
The government’s benchmark 2030 bond was weaker, with the yield up 6.5 basis points at 10.115%.
(Reporting by Tannur Anders and Alexander Winning; Additional reporting by Kopano Gumbi; Editing by Sonia Cheema, Bhargav Acharya and Alex Richardson)
