After China’s economic growth for the first quarter of 2013 was shown to be below economist’s expectations, commodities like gold plummeted and the Rand tumbled.
At the current exchange rate 1 US Dollar will purchase 9.1317 South African Rand as of 11:25 am GMT
Yesterday the South African currency was able to recoup much of its losses as stability returned to the commodities market, but the Rand has weakened against its US rival today following the release of domestic data.
Last July the South African Reserve Bank unexpectedly cut its benchmark interest rate to 5 per cent, an over thirty year low. The latest figures have shown that the South African inflation rate held steady at 5.9 per cent in March, a result which gives the nation’s central bank scope to implement additional stimulus.
After the inflation data was released economist Annabel Bishop noted: ‘There is still the possibility of a 25 basis-point easing if the economic slowdown becomes more broad-based and persistent.’
Meanwhile, another industry expert said of the result: ‘One of the main reasons for the fairly high monthly increase is the petrol price increase at the beginning of March. We expect inflation to be around 6 percent but not much higher than that this year. Inflationary pressures overall in South Africa, because of low demand, aren’t that high at the moment. Pressure on food prices seems to be a bit less than it used to be. The lack of inflationary pressures is an indication of the still relative weakness in the overall economy, and globally, inflation is also under control.’
Economists expected South Africa’s Consumer Price Index to rise by 6 per cent in March, taking it to the limit of the Reserve Bank’s target of 3-6 per cent.
It has also been forecast that today’s South African retail sales data will show that sales slowed from 1.9 per cent in January to 1.8 per cent in February.
Industry experts, like strategist Bruce Donald, expect this week’s figures to support a picture of intensifying stagflation (stagnant growth combined with high inflation.)
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