US INFLATION DATA LIFTS RAND

THE RAND firmed yesterday, recovering alongside other emerging market currencies following the surprise inflation increase in the US, as investors saw smaller chances of higher lending rates by the US Federal Reserve.

At 5pm, the rand was at R14.10 to the dollar compared to an overnight close of R14.14. This was, however, some 5 cents softer than at the same time on Wednesday.

Data on Wednesday showed US consumer prices increased the most in nearly 12 years in April, intensifying concerns over rising inflation and raising expectations that the central bank would tighten its monetary policy.

Those fears cooled somewhat yesterday with traders taking heart from a Fed official saying the twin surprises of weak jobs growth and strong inflation had not dented the bank’s plans to keep its support for the economy.

Another jump in mining production, with output up 21.3 percent yearon-year in March, also aided demand for the rand, although analysts cautioned that the strong recovery was due to base effects after sharp plunges last year due to Covid-19 lockdowns.

“Looking ahead, the sector faces counter-balancing factors. On the international front, improving industrial activity and firmer commodity prices will support higher production,” said analysts at Nedbank in a note.

Shares on the JSE failed to shrug off a pall of gloom that hung over global stocks due to inflation worries, but managed to recoup some losses at the fag end of trading after a rebound in Wall Street.

The local stock market, just like global markets, is hovering around its all-time high levels and investors are prone to take profits on signs of slight worry.

The benchmark JSE all share index shed 1.86 percent to end at 66 168.65 points and the blue-chip index of Top40 companies ended 2.14 percent down to 60 211.08 points.