South African rand slips from 5-month high after lending rate hike
JOHANNESBURG, March 25 (Reuters) – The South African rand weakened to a five-month high against the dollar on Friday, although it still posted a weekly gain, after the central bank raised the repo rate, citing inflation risks related to the Ukrainian crisis.
At 15:00 GMT, the rand ZAR= traded at 14.5755 against the dollar, 0.46% lower than the previous close, but still a weekly gain of 3.3%. Earlier in the day it touched 14.4738, the highest level since October 21st.
On Thursday, the South African Reserve Bank (SARB) raised its main policy rate by 25 basis points to 4.25%, but the five-member Monetary Policy Committee was split 3-2, with two members preferring a 50 basis points larger move. .
The outcome and the hawkish tone of the statement were in line with analyst and market expectations, said Carmen Nel, economist and macro strategist at Matrix Fund Managers, in a note.
“However, there were some surprises. The fact that two of the five members of the monetary policy committee voted for a 50 basis point increase…while a pause was not discussed suggests that a a 50 basis point hike at one of the following meetings became a distinct possibility,” Neel said.
The rand has been one of the best-performing emerging currencies since Russia invaded Ukraine a month ago, with higher prices for commodities such as gold, palladium, platinum and coal , which benefit resource-rich South Africa, offering support.
In fixed income securities, the yield of the benchmark government bond 2030 ZAR2030= rose 9 basis points to 9.69%.
Stocks were mostly flat, with the Johannesburg Stock Exchange’s Top-40 Index .JTOPI falling 0.17% to 67,578 points and the broader All-Share index .JALSH down just 0.03% to 74,325 points.
Gold and platinum companies dragged the blue chip index lower as a drop in gold and platinum spot prices reversed some of Thursday’s gains on price increases.
Northam Platinum NPHJ.J was the index’s biggest loser for a second straight day, adding another 8.45% drop to that seen on Thursday, when its shares were hammered by a disappointing account statement.
(Reporting by Olivia Kumwenda-Mtambo, Rachel Savage and Emma Rumney; Editing by Subhranshu Sahu and Jonathan Oatis)
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