South African rand falls against stronger dollar amid mixed local data

JOHANNESBURG (Reuters) – The South African rand slipped on Thursday against a stronger dollar after U.S. inflation rose more than expected, fuelling concerns that the Federal Reserve will keep interest rates high for a while.

At 1526 GMT, the rand traded at 18.9500 against the dollar, about 0.6% weaker than its previous close, after making strong gains on Tuesday and Wednesday.

The dollar last traded around 0.7% stronger against a basket of global currencies.

Data out of the U.S. on Thursday showed that underlying inflation slowed, boosting bets that the Fed would hold off on a rate hike in November.

However, annual inflation reaching the Fed’s 2% target could take some time, making it likely that the central bank could keep rates elevated for longer.

The rand, like other emerging market currencies, is highly sensitive to global drivers such as U.S. economic data.

Locally, South African business confidence fell marginally in September, while total mining output fell 2.5% year on year in August, data showed.

The country’s manufacturing output rose 1.6% year on year in August after rising by a revised 2.2% in July.

“The current business climate is not conducive to stimulating overall economic activity,” said the South African Chamber of Commerce and Industry.

On the Johannesburg Stock Exchange, the blue-chip Top-40 closed about 0.7% lower.

South Africa’s benchmark 2030 government bond was stronger, with the yield down 5.5 basis points to 10.670%.

(Reporting by Tannur Anders; Editing by Alexander Winning, Bhargav Acharya and Jonathan Oatis)