The South African rand appears poised to conclude the week with a marginal strengthening, prompted by a recent decline in inflation that brought it back within the targeted range. Additionally, the central bank’s decision to temporarily halt interest rate hikes has also contributed to the currency’s stability.
As of 0725 GMT on Friday, the South African rand was observed trading at 17.8800 against the US dollar, marking an increase of approximately 0.3% in strength compared to its previous closing rate. Impressively, the rand has exhibited a notable gain of around 1% against the US dollar throughout the course of this week.
In a resolute tone, Central bank governor Lesetja Kganyago underscored that the decision to put a hold on the interest rate does not imply the termination of the ongoing hiking cycle. However, contrasting this stance, analysts from Rand Merchant Bank (RMB) highlighted that the market has yet to incorporate the potential for additional interest rate hikes into its existing pricing models.
The analysts further accentuated their point in a research note, stating that, all things considered, the rand continues to perform exceptionally well.