JOHANNESBURG (Reuters) -The South African rand extended gains to trade nearly 2% stronger against the U.S. dollar on Wednesday, after July inflation data came in lower than expected and the greenback slipped.
At 1608 GMT, the rand traded at 18.4725 to the U.S. dollar, about 1.8% stronger than its previous close. Earlier in the afternoon it hit a weekly high at 18.4225.
The dollar was trading down almost 0.2% against a basket of global currencies.
The rand had gained around 1% on Tuesday as risk appetite returned to global markets due to falling U.S. Treasury yields.
Statistics South Africa said annual headline consumer inflation slowed to 4.7% in July from 5.4% in June, a bigger drop than the 5.0% rate analysts polled by Reuters had predicted and near the midpoint of the central bank’s target range.
The figures will likely inform the South African Reserve Bank’s interest rate decision when it meets in September, but some analysts said inflation could rise again in August.
“The… inflation rate is likely to lift somewhat in August on base effects as July 2022 proved to be the peak for the inflation trajectory,” Investec economist Annabel Bishop said in a research note.
The rand got a boost on Wednesday afternoon as the dollar slipped due to weak U.S. economic data, and as gold, platinum and copper prices traded higher, said Shaun Murison, senior market analyst at IG.
South Africa hosted leaders from Brazil, India, Russia and China in Johannesburg for the second day of the BRICS summit of emerging economies on Wednesday.
South African foreign minister Naledi Pandor said that the five countries had reached an agreement on mechanisms for expanding the bloc, and would give more details before the summit closes on Thursday.
South Africa’s benchmark 2030 government bond was stronger, with the yield down 1 basis point to 10.280%.
Shares on the Johannesburg Stock Exchange rose, with the blue-chip Top-40 index closing 0.9% higher.
(Reporting by Tannur Anders and Nellie Peyton; Editing by Andrew Heavens, David Evans and Jonathan Oatis)
