By Siyanda Mthethwa
JOHANNESBURG (Reuters) -South Africa’s rand was little moved on Wednesday, despite the country’s highest inflation reading for 10 months, as investors awaited minutes from the Fed’s July meeting and a symposium later this week that could provide U.S. monetary policy clues.
The rand, like other risk-sensitive currencies, often takes cues from global drivers such as U.S. policy and economic data.
At 1420 GMT, the rand traded at 17.7025 against the dollar ZAR=D3, 0.1% softer than Tuesday’s close.
South Africa’s consumer price inflation rose to 3.5% year-on-year in July, driven to its highest level since September 2024 by higher food and fuel prices.
The outcome was in line with the median forecast of economists polled by Reuters and within the central bank’s 3% to 6% target range.
South African Reserve Bank (SARB) Governor Lesetja Kganyago has consistently called for a lower inflation target, saying the current range is too wide and undermines the competitiveness of Africa’s largest economy.
“Lowering the inflation target is the right thing to do, as most of SA’s peer economies have inflation targets between 2% (Mexico) and 3% (Brazil),” said Isaac Matshego, a senior economist at Nedbank.
“We believe that SA can keep inflation around 3% on a sustainable basis, but we expect a transition period that will keep inflation above that level,” said Matshego.
The dollar last traded flat against a basket of currencies.
“The release of the Federal Reserve meeting minutes tonight could trigger short-term currency volatility; however, the market is more likely to react to Fed Chair Powell’s speech at the Jackson Hole Symposium on Friday,” said Shaun Murison, senior analyst at wealth manager and securities broker Rand Swiss.
He added that he expected the rand to continue trading within a steady range against the dollar.
The Johannesburg Stock Exchange’s Top-40 index was down about 0.2%.
In contrast, South Africa’s benchmark 2035 government bond was stronger, with the yield down 4.5 basis points to 9.605%.
(Additional reporting by Sfundo Parakozov. Editing by Emelia Sithole-Matarise and Mark Potter)
