* Market looks to rate call decision next week
* Rand on track for weekly loss of nearly 2 percent
JOHANNESBURG, March 23 (Reuters) – South Africa’s rand was
on track for its biggest weekly loss since mid-December on
Friday as the local market scales back expectations of higher
domestic rates this year.
Government bonds strengthened further, pushing yields lower,
after consumer inflation came in less than expected this week,
suggesting the Reserve Bank will have leeway to keep rates at
their lowest level in 30 years for longer.
All 24 economists polled by Reuters on Friday expect the
Reserve Bank’s Monetary Policy Committee to keep the key repo
rate unchanged at 5.5 percent next Thursday, with 12 seeing no
change throughout 2012.
After losses earlier in the week, the rand was largely
steady against the dollar in quiet Friday trade, down 0.12
percent at 7.7215 to the dollar at 1618 GMT.
A close at these levels would shave nearly 2 percent off the
local currency’s value this week, reversing some of its recent
gains.
“A lot of the rand’s gains last week were based on the
hawkish message from (central bank Governor Gill) Marcus, but
since the February CPI release, markets are less certain that a
rate hike will be delivered at the end of the year,” said
Christopher Shiells, emerging market analyst at Informa Global
Markets.
Markets moved to price in a higher chance of a rise in rates
after Marcus said last week inflation pressures were becoming
more generalised, with more evidence of pressure from the
demand-side of the economy.
Continued…
