JOHANNESBURG (Reuters) -The South African rand rallied on Thursday afternoon, as the dollar dropped sharply on lower-than-expected U.S. inflation data that could allow the Federal Reserve to dial back its hefty interest rate hikes.
At 1517 GMT, the rand traded at 17.4525 against the dollar, up about 1.8% on its previous close.
The dollar index, which tracks the U.S. currency against a basket of others, was down more than 1.6%.
U.S. consumer prices were up 7.7% year on year in October, marking the first time since February that the annual increase was below 8%.
Among domestic drivers for the rand, South African manufacturing data for September surprised to the upside, rising 2.9% year-on-year versus analysts’ predictions for a 2.35% fall.
“The recovery in manufacturing in the third quarter was encouraging and points to the sector making a positive contribution to aggregate GDP following the negative contribution in the second quarter,” Nedbank economists said in a research note.
The Johannesburg Stock Exchange’s All-share index closed 1.5% higher, helped by optimism over the U.S. inflation numbers. The yield on the South African government’s benchmark 2030 bond fell 22 basis points to 10.28%, reflecting a stronger price.
(Reporting by Anait Miridzhanian and Alexander Winning; Editing by Alex Richardson)
