Market News

JOHANNESBURG, May 22 (Reuters) – The rand held largely steady in muted early trade on Friday, as investors held off from making large bets ahead of the South African Reserve Bank’s (SARB) interest rate decision next week.

At 0651 GMT the rand traded at 16.47 against the dollar, a whisker away from its previous close.

Market focus is firmly on the SARB’s Monetary Policy Committee meeting scheduled for Thursday.

Advertisement

Most economists expect a 25-basis-point rate hike, likely with a split vote.

“The SARB may hike interest rates at the upcoming MPC meeting to reduce the likelihood of second-round inflation pressure,” said Elna Moolman, Standard Bank’s head of South Africa macroeconomic research.

But Moolman also noted that policymakers could argue that monetary conditions are already sufficiently tight and look past what is expected to be a temporary inflation spike.

Data released this week showed inflation accelerated sharply to 4% in April from 3.1% in March, marking its highest level since August 2024.

Investors will also monitor a series of economic indicators due next week, including the leading business cycle index on Tuesday, producer inflation on Thursday, and figures for money supply, private sector credit, trade balance, and budget balance on Friday.

The U.S. dollar was flat against a basket of currencies after a volatile overnight session on conflicting signals over a potential U.S.-Iran peace deal, though investors latched onto hopes of some progress.

Advertisement

On the Johannesburg Stock Exchange, the Top-40 index was up 0.7%.

South Africa’s benchmark 2035 government bond was little moved in early deals, with the yield at 8.77%.