The South African Rand gained against the US Dollar, while pulling back from a three-month low, ahead of South African CPI inflation report and South African Reserve Bank’s (SARB) policy decision on Wednesday and Thursday respectively.
The SARB is largely expected to leave its benchmark interest rate without change at 8.25% at its January meeting.
SARB Governor Lesetja Kganyago had said that inflation would need to ease sustainably to around 4.5% before the central bank could consider cutting interest rates.
The CPI inflation data for December, due out a day before the SARB’s interest rate decision, will also be closely watched by Rand traders.
South Africa’s annual headline inflation probably decelerated further in December, to 5.2%, according to market consensus, from 5.5% in November. If so, the inflation rate would be within the SARB’s 3%-6% target band for a seventh straight month.
As of 8:02 GMT on Wednesday USD/ZAR was retreating 0.69% to trade at 18.8972. Earlier this week, the exotic Forex pair went up as high as 19.2165. The latter has been the pair’s strongest level since October 26th 2023 (19.2710).
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