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Johannesburg - The rand lost ground against the dollar on Wednesday, although traders expected it to recover later if inflation comes in higher than expected, boosting the case for an interest rate hike.
The rand was trading at 10.5500 to the dollar by 08:36, down 0.21% from Tuesday's close in New York, but well within the 10.4700 - 10.5900 range that has held for more than a week.
Government bonds were largely flat in early trade, with yields for the benchmark 2026 and 2015 instruments each dipping half a basis point from overnight closing levels to 8.49% and 6.805% respectively.
Consumer inflation data due out at 10:00 should give the market pointers on whether the South African Reserve Bank will hike interest rates further at its May meeting, adding to an unexpected 50 basis point increase in January.
"The rates market is pricing in a 50% chance of a rate hike at the next meeting and this will increase should the inflation print come out higher than the 5.9% currently expected," said Standard Bank trader Warrick Butler.
"This will more than likely support the rand with potential for it to move back down to the bottom of the range on a print above 6.0%. A more benign print and we could see an unwind of paid positions resulting in the rand pushing up against the resistance level."
The rand was trading at 10.5500 to the dollar by 08:36, down 0.21% from Tuesday's close in New York, but well within the 10.4700 - 10.5900 range that has held for more than a week.
Government bonds were largely flat in early trade, with yields for the benchmark 2026 and 2015 instruments each dipping half a basis point from overnight closing levels to 8.49% and 6.805% respectively.
Consumer inflation data due out at 10:00 should give the market pointers on whether the South African Reserve Bank will hike interest rates further at its May meeting, adding to an unexpected 50 basis point increase in January.
"The rates market is pricing in a 50% chance of a rate hike at the next meeting and this will increase should the inflation print come out higher than the 5.9% currently expected," said Standard Bank trader Warrick Butler.
"This will more than likely support the rand with potential for it to move back down to the bottom of the range on a print above 6.0%. A more benign print and we could see an unwind of paid positions resulting in the rand pushing up against the resistance level."
