Yesterday the Rand fell against its US counterpart following the release of South African inflation data, and even after unexpectedly strong retail sales figures the currency remains bearish today.
At the current exchange rate 1 US Dollar will purchase 9.1700 South African Rand as of 10:08 am GMT
After inflation came in at 5.9 per cent, rather than the 6 per cent expected, the Rand weakened to 9.1317 against the US Dollar.
As foreign exchange expert Gary Booysen observed: ‘With inflation being slightly less than expected, the weakening we’re seeing in the Rand is probably related to reduced chances of a rate cut. Investors will be anticipating slightly lower yields.’
The South African Reserve Bank hasn’t issued a rate cut since last July, when it slashed the benchmark interest rate to an over thirty-year low of 5 per cent.
The Rand remained softer against the US Dollar as local trade progressed despite separate data revealing that retail sales in South Africa surged in February.
Month-on-month sales were up by 2.7 per cent. Meanwhile, year-on-year sales increased by 3.8 per cent from January’s 2.2 per cent.
Economists had expected a gain of 1.8 per cent.
After the report was published analyst Mark Fennell commented: ‘The rate at which households are going into new debt remains strong, growing by just less than 10 per cent. The credit environment indicates there is still positive monetary space to boost retail sales.’
Although this retail sales result was positive, declining consumer confidence levels (which hit a nine-year low in the first quarter) could herald a sales slump in the months ahead.
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