Picture: ISTOCK
Picture: ISTOCK

The rand strengthened against hard currencies on Monday afternoon, as recent dollar weakness and a climb-down by the government on the Mining Charter, saw the local unit extend gains made on Friday.

US economic data on Friday, pointing to soft inflation and domestic demand, had made it likely monetary policy tightening in the world’s largest economy would be gradual, analysts said.

The rand was also supported by the government’s announcement late on Friday that it would suspend the controversial new Mining Charter.

This helped lift the rand, but the policy uncertainty in the mining sector would persist, said Sasfin Securities analysts.

At 3.32pm, the rand was at R12.9504 to the dollar from R13.0291, at R14.8441 to the euro from R14.9608 and at R16.929 to the pound from R17.0867.

The euro was at $1.464 from $1.1473.

Gold, which is usually seen as a hedge against loose monetary policy, was up 0.56% to $1,235.06 an ounce.

Locally all eyes are on the Reserve Bank monetary policy committee meeting (MPC), which concludes on Thursday.

A consensus forecast of economists polled by Bloomberg was that the Bank will leave the repo rate unchanged at 7%, despite softening inflation data and SA’s technical recession.

This would be the most difficult rate decision for the Bank this year, said Rand Merchant Bank currency strategist John Cairns.

The MPC meeting is the first since Public Protector Busisiwe Mkhwebane recommended the inclusion of a socio-economic element to the Bank’s mandate. Mkhwebane has since indicated she would not oppose a legal review of her findings, which has been sought by the Bank.

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