JOHANNESBURG (Reuters) -The South African rand weakened on Thursday as the U.S. dollar firmed, bolstered by market expectations of more rate hikes.
At 1700 GMT, the rand traded at 18.7800 against the dollar, 0.63% weaker than its previous close.
The dollar last traded at 103.29, around 0.3% stronger, against a basket of global currencies.
The U.S. currency has been supported since Wednesday when Federal Reserve Chairman Jerome Powell did not rule out more rate hikes.
On Thursday, the dollar index climbed to a two-week high after economic data showed the labor market remained on a solid footing, giving the Federal Reserve a possible cushion to continue raising interest rates.
South Africa’s producer inflation slowed to 7.3% year on year in May from 8.6% in April, data showed on Thursday.
“We expect producer prices to moderate even further in the coming months,” Nedbank analysts said in a research note.
“However, there is still a risk that inflation could recede at a slower-than-anticipated pace.”
Other data showed South Africa recorded a small foreign direct investment inflow of 0.5 billion rand ($26.64 million) in the first quarter of 2023, down from a revised inflow of 64.0 billion rand in the previous quarter.
On the stock market, the Top-40 and the broader all-share indexes closed almost unchanged.
South Africa’s benchmark 2030 government bond was weaker, with the yield up 1.5 basis points to 10.495%.
($1 = 18.7691 rand)
(Reporting by Tannur Anders and Anait Miridzhanian. Editing by Jane Merriman)
