JOHANNESBURG (Reuters) -The rand gained on Monday, as investors looked to inflation data this week and the possible removal of South Africa from the Financial Action Taskforce’s “grey” list.
At 1446 GMT the rand traded at 17.2425 against the dollar, up 0.6% from its Friday close.
Domestically-focused investors will scrutinise September consumer price inflation data this week for clues on the health of Africa’s largest industrialised economy.
“We expect limited upside inflationary pressure with a marginal 0.1% m/m increase. This translates to 3.3% y/y, in line with last month’s reading and close to the central bank’s target of 3.0%,” Investec economist Lara Hodes said in a note.
Economists polled by Reuters expect inflation to edge up to 3.5% from 3.3% in August.
ETM Analytics said in a research note that South Africa remains on course to exit the FATF’s grey list of countries under increased scrutiny.
Global anti-money laundering watchdog FATF’s plenary meeting takes place from October 22-24.
“Removal from the grey list may not have the same mechanical impact of increasing portfolio flows immediately, but it would lend the ZAR greater support over the medium to long term, and at the very least, remove one reason for not exposing a portfolio towards South Africa,” said ETM Analytics.
The dollar was down against a basket of currencies as investors awaited upcoming U.S.-China trade talks and U.S. inflation data this week.
On the Johannesburg Stock Exchange, the Top-40 index was last up 0.8%.
South Africa’s benchmark 2035 government bond was stronger, as the yield fell 10.5 basis points to 8.92%.
(Reporting by Anathi Madubela; Editing by Kirsten Donovan and Alexander Smith)
