The rand extended the previous day’s rally on Thursday, hitting its highest since mid-April, as the dollar sagged on a slowdown in US inflation that could mean fewer Federal Reserve interest rate hikes.
At 1020 GMT, the rand traded at R18.04 against the dollar.
It earlier traded at R18 to the dollar for the first time since April 20, after closing up 2% on Wednesday when US inflation came in slower than expected.
Casparus Treurnicht, a portfolio manager at Gryphon Asset Management, linked the rand’s gains to the dollar’s weakness, saying the Fed now had less incentive to keep raising rates in light of fading price pressures.
Andre Cilliers, currency strategist at TreasuryONE, said given the pace of its recent rally, the rand could consolidate around R18 to the dollar, pointing to fairly healthy dollar demand late on Wednesday when South African importers took advantage of better hedging levels.
In a sign of domestic economic challenges, data on Thursday showed South Africa’s total mining output fell 0.8% year-on-year in May, down from a revised increase of 3.2% in April.
April was the first month mining output had recorded growth in 14 months and analysts polled by Reuters predicted output would expand 1.4% in May.
Miners face headwinds including the worst rolling blackouts on record, a major drag on power-hungry sectors.
On the Johannesburg Stock Exchange, the blue-chip Top 40 index last traded around 0.6% stronger than its closing level on Wednesday.
Despite the weak mining data, the resources index was up around 1.3%, helped by higher precious metals prices.
South Africa’s benchmark 2030 government bond was also stronger on Thursday, as the yield fell 7.5 basis points to 10.385%.
