(Reuters) -South Africa’s rand strengthened on Monday, as the dollar weakened ahead of key U.S. inflation data due on Tuesday that might give clues on how aggressively the Federal Reserve may hike interest rates at its Sept. 21 policy meeting.
At 1553 GMT, the rand traded at 17.1175 against the dollar, 1.23% stronger than its previous close.
The dollar index, which measures the currency against six major rivals, was down 0.52% at 108.19 after hitting a two-decade peak of 110.79 last week.
Investors will be looking at U.S. inflation data, which will be key for determining the policy direction that the Fed will take in the near term.
“With the U.S. CPI figures released tomorrow afternoon there could be space for the rand to strengthen in the interim,” Investec analyst Annabel Bishop said in a research note.
However, she added that the rand is still very weak overall and is still reflective of an elevated risk aversion environment.
Shares on the Johannesburg Stock Exchange rose, mirroring gains in global equities as oil prices climbed on supply concerns.
Overall on the stock market, the Top-40 ended 1.59% higher while the broader all-share rose 1.55%.
The government’s benchmark 2030 bond strengthened, with the yield down 12 basis points at 10.185%.
(Reporting by Anait Miridzhanian in Johannesburg and Bhargav Acharya in BengaluruEditing by Christian Schmollinger and Matthew Lewis)
