Rand unfazed by weak producer inflation and a firmer dollar
Consumer inflation is set to rise, but the Reserve Bank might hold off on rate hikes if it remains within the target range
The rand was firmer on Thursday afternoon, despite the release of weaker-than-expected producer price inflation and the dollar having gained against the euro following the US Federal Reserve's rate hike on Wednesday. Headline producer inflation accelerated to 6.3% in August from 6.1% in July, much higher than the consensus forecast of 5.9%. It is likely that a lower figure would have supported the rand, as that reduces the possibility of further rate hikes by the SA Reserve Bank. Nedbank analysts said consumer inflation was expected to increase in the next few months. "But we do not foresee a rise above the Reserve Bank's 6% upper target over the medium term." This relatively benign inflation outlook and the still weak economy will probably convince the Bank's monetary policy committee (MPC) to delay hiking rates for as long as possible, Nedbank said. The dollar regained some lost ground on the day after the market initially saw the Fed's forward view as less hawkish, causing the e...
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