SA rand extends losses on CPIX data

JOHANNESBURG – South Africa’s rand extended losses yesterday after the release of bullish March inflation data which traders said could delay an expected interest rate increase to the fourth quarter of the year.

The country’s benchmark CPIX (Consumer Prices Index) tracked by the Reserve Bank for monetary policy rose by an annual 4,4 per cent after climbing 4,8 per cent in February, below market expectations of a 4,6 per cent increase, Statistics South Africa said. At 1030 GMT the rand was trading at 6,80 to the USdollar – a loss of about 15 cents on the day.”The numbers were quite good from an inflation point of view.I think the guys are looking at them and saying that the interest rate hike gets pushed out by another quarter,” said one trader at a domestic bank.The markets had priced in a series of rate hikes, starting in the third quarter, after borrowing costs were slashed by 5,5 percentage points last year.High interest rates, strong commodity prices and broad dollar weakness lifted the rand 28 per cent against the greenback last year, following gains of 40 per cent the previous year.Traders said a break through 6,88/dollar could see the rand march to 7/dollar.They said the market was also awaiting the cabinet reshuffle expected yesterday.Finance Minister Trevor Manuel, credited with spearheading market-friendly policies, kept his post, which he has held since 1996.The yield on the short-dated R194, due 2008, was bid at 9,70 per cent after earlier falling 8,955 per cent.Yields on the benchmark R153 bond, due 2010, were bid at 9,75 per cent from 9,69 earlier.- Nampa-ReutersAt 1030 GMT the rand was trading at 6,80 to the USdollar – a loss of about 15 cents on the day.”The numbers were quite good from an inflation point of view.I think the guys are looking at them and saying that the interest rate hike gets pushed out by another quarter,” said one trader at a domestic bank.The markets had priced in a series of rate hikes, starting in the third quarter, after borrowing costs were slashed by 5,5 percentage points last year.High interest rates, strong commodity prices and broad dollar weakness lifted the rand 28 per cent against the greenback last year, following gains of 40 per cent the previous year.Traders said a break through 6,88/dollar could see the rand march to 7/dollar.They said the market was also awaiting the cabinet reshuffle expected yesterday.Finance Minister Trevor Manuel, credited with spearheading market-friendly policies, kept his post, which he has held since 1996.The yield on the short-dated R194, due 2008, was bid at 9,70 per cent after earlier falling 8,955 per cent.Yields on the benchmark R153 bond, due 2010, were bid at 9,75 per cent from 9,69 earlier.- Nampa-Reuters