JOHANNESBURG (Reuters) -The South African rand strengthened on Wednesday, as December inflation came in higher than expected, bolstering the case for the central bank to raise interest rates next week.
Statistics South Africa data showed annual consumer inflation accelerated to 5.9% last month from 5.5% in November, approaching the top of the South African Reserve Bank’s (SARB’s) 3%-6% target range.
Another release by the statistics service showed November retail sales grew 3.3% year on year, also more than forecast.
Those readings helped the rand trade 1.2% stronger on the day at 15.3300 to the dollar by 1510 GMT.
Also supporting the rand, the dollar slipped about 0.2% against a basket of currencies.
A Reuters poll predicted the SARB would raise its repo rate by another 25 basis points to 4.00% at its first monetary policy meeting of 2022. The decision from that meeting is due on Jan. 27.
The government’s benchmark 2030 bond also advanced, with the yield falling 9.5 basis points to 9.365%, as did the local stock market.
The Johannesburg Stock Exchange’s All-share index ended up 1.6% at 76,176 points, while the Top 40 companies’ index closed up 1.8% at 69,513 points.
Among risers, luxury goods company Richemont, which sells brands such as Cartier and Mont Blanc, said on Wednesday that its sales were up around a third in its third quarter ended December. Its shares on the JSE gained over 5%.
“Richemont was a nice surprise. It is a huge component of the All-share index and their sales number alone drove the market into positive,” said Greg Davies, trader at Cratos Capital.
The JSE was further boosted by resource companies which rose on rising metal and oil prices, Davies added. The resources index rose more than 3%.
(Reporting by Alexander Winning and Promit Mukherjee; Editing by Alexandra Hudson)
