The rand and JSE traded firmer on Tuesday amid continued rolling blackouts, Cyril Ramaphosa surviving the impeachment process vote in parliament and US inflation numbers printed below estimates.
The JSE closed 1.90% firmer while its global peers were also in the green by 5 pm after the US Bureau of Labor Statistics reported that the consumer price index (CPI), which is used to measure inflation in the US, dropped to 7.1% in November, down from 7.7% in the previous month.
The reading came out below the market forecast of 7.3% while the immediate aftermath of the announcement saw the dollar come under pressure.
The US dollar index was last seen trading at its lowest level since June.
The rand jumped onto the front foot and at 17:17 it was trading at R17.29 against the greenback and was also stronger versus the euro and sterling at R18.42 and R21.47 respectively.
A weakened dollar has benefits for South Africa like a decrease in fuel prices while, in theory, the higher a country’s interest rate the better it is for investors to put money into that country’s banking system.
The US CPI numbers were the first event investors will have had eyes on this week, with the second coming on Wednesday following the conclusion of the year’s final US Federal Reserve meeting.
The Fed is expected to raise the interest rate by 50 basis points, less than the 75-bps hike it has opted for at the previous four meetings.
Fed chair Jerome Powell confirmed last month that smaller rate hikes were on the cards, saying: “The time for moderating the pace of rate increases may come as soon as the December meeting.”
