JOHANNESBURG, Dec 10 (Reuters) – The South African rand edged up on Wednesday, following the release of domestic retail sales data as investors awaited a U.S. Federal Reserve policy meeting later in the day.
At 1329 GMT the rand traded at 17.03 against the dollar, up roughly 0.2% on Tuesday’s close.
Statistics South Africa published October retail sales data, which showed that sales rose 2.9% year-on-year in October after rising by a revised 3.0% in September.
Economists polled by Reuters had predicted a 2.3% rise.
“Consumers are benefiting from relatively low inflation, although this tailwind has already faded, quite notably in the last few months.
There’s also some support from quite robust growth in the government wage bill this year, underpinned by above-inflation wage increases,” said Elna Moolman, Standard Bank Group Head of South Africa Macroeconomic Research.
Moolman added that consumers had further benefited from 1.5 percentage points of interest rate cuts over the past year.
“We still expect further interest rate relief next year, though this will probably occur quite gradually,” Moolman said.
Global investor attention will later be focused on an expected 25 basis point interest rate cut by the Fed, possibly accompanied by hawkish guidance.
ETM Analytics said while a cut would already be priced in, guidance offered by Fed Chairman Jerome Powell would likely spark market movement.
Like other risk-sensitive currencies, the rand often takes its cues from global drivers such as U.S.
policy and economic data in addition to domestic releases.
“For now, the ultimate assessment is that the ZAR will retain some resilience. It has many fundamentals that are working in its favour,” ETM Analytics said.
On the Johannesburg Stock Exchange, the Top-40 index was last up 0.2%.
South Africa’s benchmark 2035 government bond was little changed, with the yield at 8.505%.
(Reporting by Sfundo Parakozov and Anathi Madubela;Editing by Alex Richardson and Alison Williams)
