South African rand dips as inflation spikes; shares edge up

JOHANNESBURG (Reuters) -South Africa’s rand weakened against the U.S. dollar on Wednesday after local data showed higher-than-forecast inflation in October.

At 1636 GMT, the rand traded at 18.8375 against the dollar, around 1% weaker than its previous close.

The dollar was last up around 0.5% against a basket of major currencies.

Headline consumer inflation rose to 5.9% year-on-year in October from 5.4% in September, data from Statistics South Africa showed.

Analysts polled by Reuters had forecast consumer price inflation at 5.5%.

However, the South African Reserve Bank is still expected to leave rates unchanged on Thursday, analysts said.

“Given that the rise was driven by non-core components, the tightening cycle is unlikely to be restarted,” Jason Tuvey, senior emerging markets economist at Capital Economics, said in a note.

“But there’s a growing risk that policymakers decide to delay the start of monetary easing until much later in 2024,” Tuvey added.

On the stock market, the Top-40 and the broader all-share indexes closed around 0.7% higher.

South Africa’s benchmark 2030 government bond was weaker in late deals, with the yield up 23.5 basis points to 10.140%.

(Reporting by Bhargav Acharya and Anait Miridzhanian; Editing by Subhranshu Sahu, Kirsten Donovan)