JOHANNESBURG (Reuters) -South Africa’s rand strengthened on Thursday to extend a five-month high after the central bank raised the repo rate by 25 basis points to 4.25%, with the Monetary Policy Committee (MPC) split over whether to increase rates further.
At 1407 GMT, the rand was 1.09% firmer against the dollar at 14.5924, having strengthened as much as 14.557 after the central bank announcement.
The South African Reserve Bank had been expected to hike its repo rate by 25 basis points, according to a Reuters poll of economists.
The vote of two out of five MPC members for a 50 basis point increase and upward inflation forecast revisions further strengthened the currency, one of the best performing among emerging markets since Russia invaded Ukraine a month ago.
“The hawkish hike bolsters the ZAR’s carry trade appeal, which has been one of the main factors underpinning the bullish bias in the currency, pushing the ZAR through key support levels,” Kieran Siney of ETM Analytics said in an email to Reuters.
“ZAR bulls have their sights on the 14.50 mark, which could be tested by the end of today if the bullish momentum holds.”
In fixed income, the yield on the benchmark 2030 government bond was down 7.5 basis points to 9.665%.
Stocks meanwhile fell, with the Johannesburg Stock Exchange’s Top-40 Index slipping 0.8% to 67,690 points and the broader All-Share Index losing 0.65% to 74,350 points.
The biggest loser on the blue-chip index was Northam Platinum, which fell 6.6% after a trading update disappointed investors, leaving the miner out of gains enjoyed by local peers due to higher prices of precious metals.
(Reporting by Olivia Kumwenda-Mtambo and Rachel Savage; editing by Uttaresh.V and Vinay Dwivedi)
