JOHANNESBURG (Reuters) -South Africa’s rand was steady on Thursday, little affected by the central bank’s decision to leave interest rates unchanged and the release of data showing a slowdown in producer price inflation.
At 1558 GMT the rand traded at 18.8800 against the U.S. dollar, near its previous close of 18.8825.
The South African currency strengthened on Wednesday after consumer inflation fell for a second consecutive month to 5.1% year-on-year in December.
The South African Reserve Bank (SARB) on Thursday kept its key lending rate unchanged, saying it did not yet see a clear disinflation trend that would justify cutting rates.
All 20 economists polled by Reuters forecast that the rate would be left unchanged at 8.25%.
Analysts at Nedbank echoed sentiments shared by central bank governor Lesetja Kganyago that the SARB would maintain a hawkish tone until inflation edged closer to its preferred target of 4.5%.
“The upside risks to the inflation outlook… emanating from a vulnerable rand and rising geopolitical tensions will drive the SARB to adopt a ‘wait and see’ approach before commencing its cutting cycle,” the analysts said in a research note.
Producer price inflation for December slowed to 4.0% year-on-year in December from 4.6% in November, statistics agency data earlier in the day showed.
On the stock exchange, the blue-chip Top-40 index closed more than 0.5% lower.
South Africa’s benchmark 2030 government bond was little changed, with the yield down 0.2 basis point at 9.748%.
(Reporting by Nellie Peyton and Bhargav Acharya; Editing by David Goodman and Jan Harvey)
