JOHANNESBURG, May 20 – South Africa’s rand traded little changed against the dollar on Wednesday as investors awaited inflation data expected to reflect mounting pressure from higher global fuel prices linked to tensions in the Middle East.
The currency traded at 16.68 per dollar in early trading, broadly unchanged from its previous close.
Statistics South Africa is scheduled to release April consumer inflation data later Wednesday, with economists expecting annual inflation to accelerate to 3.9% from 3.1% in March.
Economists at Nedbank forecast a higher reading of 4.4%, citing rising transport costs driven by higher fuel prices.
South Africa remains particularly exposed to global oil-price shocks because it imports most of its fuel requirements.
The inflation data comes as the conflict in the Middle East continues to disrupt global energy markets and push up crude oil prices, increasing pressure on fuel-importing economies across Africa.
Statistics South Africa is also expected to release March retail sales figures later in the day.
Analysts expect retail sales growth to improve to 2.5% year-on-year in March from 1.6% in February, reflecting stronger consumer spending before the full economic effects of the Iran conflict filtered through global markets.
Nedbank economists said household spending during the period was supported by relatively low inflation, improving financial conditions and stronger consumer sentiment prior to the escalation in global energy prices.
South Africa’s benchmark 2035 government bond strengthened slightly in early trading, with the yield declining 1.5 basis points to 8.915%.
Global markets also remained focused on geopolitical developments in the Middle East and diplomatic engagements involving major world powers including China and Russia.
Investors are closely watching South Africa’s inflation trajectory as rising energy costs could influence expectations for future monetary policy decisions by the South African Reserve Bank.
