World Markets

South African rand dips before producer price data

Credit: REUTERS/THOMAS WHITE

South Africa's rand was slightly weaker early on Thursday, ahead of the release of the producer price index (PPI) which will give more clues about inflation dynamics in Africa's most industrialised economy.

JOHANNESBURG, Aug 27 (Reuters) - South Africa's rand was slightly weaker early on Thursday, ahead of the release of the producer price index (PPI) which will give more clues about inflation dynamics in Africa's most industrialised economy.

Many analysts expect a rate-cutting cycle by the South African central bank to be over, but there is still a slim chance of further rate cuts in the remainder of the year if inflation pressures remain contained.

At 0632 GMT, the rand ZAR=D3 traded at 16.9250 versus the dollar, 0.3% weaker than its previous close.

PPI data ZAPPIY=ECI is due around 0930 GMT and is forecast to show an increase of 1.7% in July, following a 0.5% increase in June.

The consumer price index ZACPIY=ECI rose 3.2% last month, data showed on Wednesday. The rand fell after that release as some traders felt it left the door open for the South African Reserve Bank to cut its repo rate ZAREPO=ECI again.

The SARB has already cut rates by 300 basis points this year in response to a collapse in inflation and weak economic projections linked to the COVID-19 pandemic.

Government bonds were also a touch weaker early on Thursday, with the yield on the 2030 bond ZAR2030= rising 3 basis points to 9.325%.

(Reporting by Alexander Winning; Editing by Toby Chopra)

((alexander.winning@tr.com; +27 11 595 2801))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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