South African currency edges closer to R15 to the dollar mark

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The rand is closing in on R15 to the dollar in midday Asian trading, after having started the year at R16 to the dollar.

This after January’s consumer price inflation rate slowed to 5.7 percent from 5.9 percent in December, and retail sales were better than expected in December at 3.1 percent.

The rand is currently also benefitting from positive sentiment due to strong company results as well as strong commodity prices.

This is pointing to the inflow of foreign currencies, as is reflected in the strengthening of government bonds. An inflow of foreign currency strengthens the rand, while an outflow weakens it.

Although the rand has strengthened to R15 to the dollar so far this year, it was as strong as R13.50 to the dollar in June last year and as weak as R19.30 in April 2020.

The world has to deal with high inflation following its economic rebound in 2021:

Consumer Price Inflation rate decreased to 5.7% in January

Figures released by Statistics South show that the headline Consumer Price Inflation (CPI) decreased to 5.7% in January from 5.9% in December, largely due to lower fuel prices.

Motorists and businesses breathed a little easier in January as fuel prices dropped by 2.8% from the record highs in December 2021.

Other contributors to the ease in the annual inflation rate were food and non-alcoholic beverages, housing and utilities, and miscellaneous goods and services.

Core inflation, which excludes food and non-alcoholic beverages, as well as fuel and energy prices from the CPI, came out at a subdued 3.5% , reflecting the impact of higher commodity prices.