The rand swung between gains and losses after inflation slowed more than economists’ forecasts and as commodity prices fell amid concern the U.S. may curtail stimulus that boosted demand for high-yielding assets.
South Africa’s currency advanced as much as 0.2 percent and retreated by the same amount. It traded less than 0.1 percent stronger at 8.9053 per dollar as of 9:35 a.m. in Johannesburg. Yields on benchmark 10.5 percent bonds due December 2026 climbed three basis points, or 0.03 percentage point, to 7.23 percent after dropping 11 basis points yesterday.
The inflation rate declined to 5.4 percent in January, from 5.7 percent a month earlier, the statistics agency reported yesterday. The median estimate of economists in a Bloomberg survey was for an unchanged inflation rate. The Reserve Bank, which has left borrowing costs unchanged since a surprise rate cut in July, aims to keep inflation below 6 percent.
“Now that the inflation threat has officially retreated somewhat, the Reserve Bank may feel emboldened to loosen policy further,” Quinten Bertenshaw, a Johannesburg-based analyst at ETM Analytics, said in e-mailed comments. “The risk for more rate cuts remains firmly on the table in 2013.”
Several U.S. Federal Reserve policy makers said the central bank should be ready to vary the pace of their $85 billion in monthly bond purchases, according to minutes of the meeting released yesterday. A slowing of quantitative easing by the Fed and other developed nations may curb demand for commodities and for high-yielding emerging-market assets.
The Standard & Poor’s GSCI index of raw materials slumped to a three-week low as prices of metals including copper and platinum tumbled. Metals and other commodities accounted for 53 percent of South Africa’s exports in 2012, according to government data.
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