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South African rand dips before producer price data

South African rand dips before producer price data

AUGUST 27, 2020


South Africa’s rand was slightly weaker early on Thursday, ahead of the release of the producer price index (PPI) which will give more clues about inflation dynamics in Africa’s most industrialised economy.

Many analysts expect a rate-cutting cycle by the South African central bank to be over, but there is still a slim chance of further rate cuts in the remainder of the year if inflation pressures remain contained.

At 0632 GMT, the rand traded at 16.9250 versus the dollar, 0.3% weaker than its previous close.



PPI data is due around 0930 GMT and is forecast to show an increase of 1.7% in July, following a 0.5% increase in June.

The consumer price index rose 3.2% last month, data showed on Wednesday. The rand fell after that release as some traders felt it left the door open for the South African Reserve Bank to cut its repo rate again.



The SARB has already cut rates by 300 basis points this year in response to a collapse in inflation and weak economic projections linked to the COVID-19 pandemic.

Government bonds were also a touch weaker early on Thursday, with the yield on the 2030 bond rising 3 basis points to 9.325%.


Source: Reuters


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