South African rand gains ahead of election, rate decision

BY Reuters | ECONOMIC | 05/27/24 12:40 PM EDT

JOHANNESBURG, May 27 (Reuters) - The South Africa rand was stronger on Monday, supported by a weaker dollar, ahead of a week headlined by the national election and featuring an interest rate decision.

At 1430 GMT, the rand traded at 18.3300 against the dollar , about 0.5% stronger than its previous close.

The dollar last traded around 0.16% weaker against a basket of global currencies.

"The USD-ZAR is now, by and large, tracking broader USD moves," said Danny Greeff, co-head of Africa at ETM Analytics.

Global markets await U.S. inflation data this week which could give hints on the interest rate path of the world's biggest economy.

The risk-sensitive rand, like other emerging market currencies, often takes cues from global drivers, such as U.S. economic data.

South Africans will vote in national and provincial elections on Wednesday. Polls suggest the governing African National Congress could lose its parliamentary majority for the first time since the end of apartheid in 1994.

On Thursday, the South African Reserve Bank (SARB) will announce its latest monetary policy decision, a day after the election.

"There is still plenty of scope for volatility through the second half of the week, as the market will need to navigate a SARB policy update and digest exit polls closer to the weekend," Greeff said.

On the stock market, both the blue-chip Top-40 and the broader all-share indexes were down almost 0.3%.

South Africa's benchmark 2030 government bond was weaker, with the yield up 2.5 basis points to 10.560%.

(Reporting by Tannur Anders and Bhargav Acharya; Editing by Toby Chopra and Tomasz Janowski)

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