Rand gains on interest rate speculation

Story link: Rand gains on interest rate speculation

The South African rand gained on the US dollar on Thursday on the possibility that the South African Reserve Bank will hike interest rates next month as a way to fight inflation.

The speculation came after remarks from the Bank’s governor that inflation is now beginning to affect other prices besides just those for food and fuel.

Factory price inflation in South Africa reached a rate of 11.2 percent on an annualized basis in February, up from 10.4 percent in January and more of a gain than had been expected.

Meanwhile, consumer price inflation stood at over 9 percent in February.

At just before 1 p.m. in New York the rand was trading at R7.9655 to the greenback.

The US dollar was up versus the euro on data showing that consumer spending was up in the fourth quarter by more than previously thought, growing by an annual 2.3 percent rather than the earlier estimate of 1.9 percent.

However, some of the greenback’s gains were lost after analysts reduced earnings forecasts in the financial sector, causing stocks for financials to decline.

In early afternoon trade in New York the dollar traded at $1.5794 to the euro.

It took ¥99.9250 to buy a dollar, while the yen was down versus the euro to ¥157.8215.