The South African rand edged up in early trade on Wednesday ahead of the release of domestic inflation and retail sales data, as investors also awaited an interest rates decision from the U.S. Federal Reserve later in the day.
At 0637 GMT, the rand traded at 17.9350 against the dollar, about 0.6% firmer than Tuesday’s close.
The risk sensitive currency fell more than 1% on Tuesday as hostilities between Israel and Iran led investors towards safe assets, dulling the appeal of the local currency.
Although it has showed signs of stabilising, “further gains are likely to be limited until after today’s Fed decision,” Andre Cilliers, Currency Strategist at TreasuryONE, said.
Before that, South Africa-focussed investors will look to the monthly consumer price index data due at 0800 GMT and retail sales data two hours later to gauge the health of Africa’s most industrialised economy.
Economists polled by Reuters estimate inflation to have remained steady 2.8% in May, while retail sales are expected to have increased 3.1% in April.
Nedbank economists said in a research note they expect consumer inflation to ease to 2.3% year-on-year in May and forecast a growth of 1.7% in retail sales, saying they would be “supported by the more subdued inflationary environment, lower interest rates and easing debt service costs, which has lifted real wages and discretionary spending”.
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