Rand Gains as Interest Rate Cut Unlikely

The South African rand appreciated today as the central bank indicated that there is a limited room for an interest rate cut due to inflation risks.

Consumer inflation has been above the 4.5 percent mid-point of the central bank’s target range since June 2011. South African Reserve Bank Governor Gill Marcus said that the bank has little scope to stimulate the economy due to rising consumer prices. The central bank said this week that the current level of borrowing costs helps to maintain “price stability and support the economic recovery”.

USD/ZAR fell from 10.0075 to 9.8625 as of 20:56 GMT today.

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