Rand firmer as markets cheer positive Asian data
Risk-on trade follows an upbeat reading of China’s first-quarter economic growth, with the local currency strengthening below the R14/$ handle
The rand was firmer on Wednesday morning, boosted by an upbeat report on Chinese economic growth, while local inflation data came in better than expected.
The rand showed little reaction to the news that inflation rose 4.5% year on year in March, slightly less than the 4.6% expected by the market. Inflation in March is at the midpoint of the Reserve Bank’s 3%-6% target range.
Global sentiment was risk on, after China reported that its economy expanded at 6.4% in the first quarter year on year, higher than the 6.3% market forecast. Importantly, industrial output surged 8.5% in March year on year, smashing expectations of a 5.9% increase, said London Capital Group head of research Jasper Lawler.
This was a clear sign that Chinese stimulus measures were working, Lawler said.
At 10.05am the rand was 0.45% firmer at R13.9687/$, 0.11% up at R15.8115/€ and 0.48% stronger at R18.2213/£. The euro had appreciated 0.34% to $1.1319.
Trading is expected to be slightly subdued this week due to the Easter holidays. China’s economic data on Wednesday was the main economic release, although locally, retail sales numbers for February are due at 1pm.
The market consensus, according to macroeconomics website Trading Economics, is for retail sales to have risen 0.6% year on year in February, a deceleration from January's 1.2% growth.