(Reuters) -South Africa’s rand strengthened against the dollar, a day after the central bank delivered the biggest rate hike in nearly two decades to try to get inflation under control.
At 1617 GMT, the rand traded at 16.8100 against the dollar, 1.22% stronger than its previous close, recovering losses from earlier in the day.
The central bank on Thursday raised its main lending rate by 75 basis points to 5.50%, a steeper hike than analysts polled by Reuters had forecast.
“Falling inflation, and evidence that previous high inflation rates are not feeding broad based inflationary pressures, will eventually limit the SARB’s hand,” Investec analyst Annabel Bishop said in a research note.
In what should come as a relief to the South African people and local investors, state power utility Eskom said that it would suspend scheduled power cuts from Saturday.
Since late June Eskom has implemented regular electricity outages that have prompted public anger and hampered businesses.
Stocks on the Johannesburg Stock exchange rose slightly in absence of major catalysts, with the benchmark all-share index closing 0.24% higher at 68,070 points, while the blue-chip index of top 40 companies ended up 0.19% at 61,767 points.
The government’s benchmark 2030 bond rose, with the yield down 21 basis points to 10.540%.
(Reporting by Anait Miridzhanian in Gdansk and Bhargav Acharya in Bengaluru; Editing by Christopher Cushing and Alison Williams)
