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South Africa’s rand made modest gains in early Wednesday trading, as investors held back from big moves ahead of key economic data that could offer fresh insight into the country’s outlook.
By 07:26 GMT, the rand was trading at 16.6250 against the dollar, about 0.3% stronger than its previous close.
Market attention is firmly on domestic indicators, with February’s consumer inflation figures due at 08:00 GMT, followed by January retail sales data at 11:00 GMT. These releases are expected to provide a clearer picture of inflation trends and consumer spending.
Economists surveyed by Reuters expect annual inflation to ease to 3.1% in February, down from 3.5% in January. Analysts at Nedbank share a similar view, pointing to lower fuel prices as a key driver of the anticipated decline.
“During the month, petrol prices fell by 3.2% as the rand appreciated against the U.S. dollar, while Brent crude oil prices remained steady. Together with a strong base effect, this resulted in a more than 10% year-on-year decline in fuel inflation,” Nedbank economists said in a research note.
On the retail front, growth is expected to slow slightly. A Reuters poll forecasts a 2.5% year-on-year increase in January, compared with 2.6% in December. Nedbank projects a marginally lower rise of around 2.4%.
“Despite the moderation, underlying momentum remains positive and is consistent with the more favourable inflation backdrop and easier financial conditions, both of which are supporting household spending,” the bank added.
Meanwhile, South Africa’s benchmark 2035 government bond strengthened in early trade, with its yield easing by 8.5 basis points to 8.71%.
