JOHANNESBURG (Reuters) -The South African rand extended its gains on Friday, as a surprisingly soft U.S. inflation data spurred bets the Federal Reserve will cut interest rates in September.
At 1528 GMT, the rand traded at 18.00 against the dollar, about 0.1% stronger than its previous close.
Data on Thursday showed that U.S. consumer prices unexpectedly fell and the annual increase was the smallest in a year.
“This is important for the rand as monetary easing in the developed world will effectively inject fresh liquidity into global markets,” said Danny Greeff, co-head of Africa at ETM Analytics, on Thursday.
“Improved risk appetite is thus anticipated into the end of the year,” Greeff added.
Like most emerging market currencies, the rand often takes its cues from U.S. economic data in addition to local factors.
U.S. inflation has been improving in recent months, and earlier this week Fed Chair Jerome Powell said that “more good data would strengthen” the case for central bank interest rate cuts.
On the stock market, the Top-40 index closed 0.8% higher.
South Africa’s benchmark 2030 government bond was stronger, with the yield down 9.5 basis points at 9.475%.
(Reporting by Tannur Anders with additional reporting by Bhargav Acharya; Editing by Sherry Jacob-Phillips and David Evans)
