JOHANNESBURG (Reuters) -South Africa’s rand strengthened on Wednesday after inflation fell for the second consecutive month in December, ahead of an interest rate decision by the central bank.
At 1508 GMT, the rand traded at 18.8500 against the dollar, 1% stronger than its previous close.
The dollar was last down about 0.41% against a basket of global currencies.
Data released by Statistics South Africa showed December year-on-year inflation slowed to 5.1% from 5.5% a month earlier. Economists polled by Reuters predicted the year-on-year figure would be 5.2%.
The South African Reserve Bank (SARB) will hold its first monetary policy committee meeting of the year on Thursday.
SARB governor Lesetja Kganyago has said he wants to see inflation decline sustainably to around 4.5% before considering rate cuts. Consumer inflation is expected to average 5% in 2024.
“We believe that the MPC (Monetary Policy Committee) will present a hawkish statement tomorrow but keep interest rates steady due to the sluggish domestic demand,” Nedbank analysts said in a research note.
Shares on the Johannesburg Stock Exchange rose, with the blue-chip Top-40 index ending 1.4% higher.
South Africa’s benchmark 2030 government bond was marginally stronger, with the yield down 1.2 basis points at 9.750%.
(Reporting by Nellie Peyton and Bhargav Acharya; Editing by Varun H K and Alison Williams)
