Rand remains steady after rate hold

The rand was flat in early trade on Friday, after the central bank kept rates on hold in a widely expected decision.

At 0635 GMT, the rand traded at R18.87 against the US dollar.

The dollar was up about 0.07% against a basket of global currencies, ahead of US inflation data later in the day which could provide global markets with fresh direction.

South Africa’s consumer inflation fell for a second consecutive month in December, but the central bank said on Thursday it did not yet see a strong enough trend to consider cutting rates.

The monetary policy committee voted unanimously to keep its lending rate unchanged at 8.25%.

“Sarb conservatism was fully priced in, and the market reaction confirms that,” said ETM Analytics in a research note.

“The USD-ZAR remained largely rangebound, with investors contemplating whether to buy into the central bank guidance of softer landings and buoyant inflation or focus on the shorter-term headlines highlighting job losses and economic difficulties that would warrant some sort of monetary easing,” it said.

The central bank highlighted that port and rail constraints were proving a major damper to economic growth. South Africa’s Richards Bay Coal Terminal on Thursday said its coal exports had hit their lowest level since 1992 as the country’s freight rail crisis continues to throttle mineral shipments.

South Africa’s benchmark 2030 government bond was stronger in early deals, with the yield down 2.8 basis points to 9.720%.