JOHANNESBURG (Reuters) – The South African rand was poised against a weaker dollar, while government bonds firmed on Monday after a survey commissioned by the country’s central bank showed longer-term inflation expectations dropped to a record low.
At 1525 GMT, the rand traded at 17.3725 against the dollar, up 0.1% on Friday’s close.
South Africa’s benchmark 2035 government bond firmed, as the yield fell 12 basis points to 9.215%.
Analysts, business people and trade unions said in a survey conducted by the Bureau for Economic Research they expected annual inflation to average 4.2% over the next five years, down from 4.4% predicted previously, after the South African Reserve Bank said it would aim for a lower inflation target.
“Following recent cuts, the SARB is expected to hold rates steady at 7%, as it aims to guide inflation expectations toward a 3% target,” said Wichard Cilliers, head of market risk at TreasuryONE.
Inflation expectations are an important data point for the SARB when it makes interest rate decisions.
Its next decision will be announced on Thursday, preceded by a consumer inflation report and retail sales data on Wednesday.
The greenback last traded about 0.3% weaker against a basket of currencies as global investors were on the lookout for a pivotal Federal Reserve meeting this week that could set the tone for the rest of the year.
On the Johannesburg Stock Exchange, the Top-40 index closed 0.3% higher.
(Reporting by Sfundo Parakozov; Editing by Bernadette Baum and Krishna Chandra Eluri)
