The South African rand weakened against the dollar on Wednesday, a day before the central bank announced its interest rate decision, after inflation remained stable at the top of the central bank’s target range and disappointing retail sales numbers.
At 20:29, the rand traded against the dollar at 16.0201, down 0.63% from its previous close.
In April, consumer inflation was in line with a five-year high of 5.9% and the central bank’s 3% -6% target, in line with a Reuters survey, according to data released by South Africa before Wednesday.
Read: CPI: Inflation stabilizes as interest rates rise
Retail sales rose 1.3% year-on-year in March, slightly below expectations of 1.5% and fell 0.3% from February, according to data released Wednesday by the Statistics Agency.
“The moderate reading of March indicates financial stress that many families are still facing in the current economic environment,” Investec economist Lara Hoods said in a note.
“An expected high interest rate and cost environment is clearly suppressing sentiment.”
A strong dollar has also weighed on risky assets worldwide, including the rand.
On the Johannesburg Stock Exchange (JSE), the all-share index fell 0.88% to 69,083 and the blue-chip index of the top-40 companies fell 0.84% to close at 62,494 points, due to the collapse of resource firms.
Tech stocks also closed lower on the JSE, including the index heavyweight Naspers, which closed down about 5%, while its partner Prosus fell more than 3%.
Read: Tencent frustrated after lockdown, will erase crackdown growth.
Investors are now awaiting the South African Reserve’s monetary policy decision on Thursday.
A Reuters poll released on Friday predicted that the bank would raise the first 50 basis-point repo rate in more than six years, taking it to 4.75%, to avoid the potential second-round impact of higher consumer prices.
At fixed income, benchmark 2030 government bond yields fell two basis points to 9.980%.