South African rand gains ground ahead of elections, interest rate decision

South African rand gains ground ahead of elections, interest rate decision
South African rand gains ground ahead of elections, interest rate decision

The South African rand strengthened on Monday, supported by a weaker dollar, ahead of a week marked by national elections and an interest rate decision.

At 1430 GMT, the rand traded at 18.3300 against the dollar, about 0.5% stronger than its previous close.

The dollar was last trading about 0.16% weaker against a basket of global currencies.

“USD-ZAR is now broadly tracking broader movements in the dollar,” said Danny Greeff, co-head of Africa at ETM Analytics.

Global markets are awaiting U.S. inflation data this week, which could provide insight into the trajectory of interest rates in the world’s largest economy.

The risk-sensitive rand, like other emerging market currencies, often takes cues from global factors, such as U.S. economic data.

South Africans will vote in national and provincial elections on Wednesday. Polls suggest the ruling African National Congress could lose its parliamentary majority for the first time since the end of apartheid in 1994.

The South African Reserve Bank (SARB) will announce its latest monetary policy decision on Thursday, a day after the election.

“There is still plenty of room for volatility in the second half of the week as the market will need to navigate the SARB policy update and exit polls heading into the week. -end,” Mr. Greeff said.

In the stock market, the Top-40 index and the general stock index were both down nearly 0.3%.

South Africa’s benchmark 2030 government bond was weaker, with the yield up 2.5 basis points to 10.560%.

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