Rand Weakens Before S. African Inflation as Fed Decision Awaited

The rand weakened against the dollar before data showing South Africa’s inflation (SACPIYOY) rate probably rose in August and as investors awaited Federal Reserve direction on stimulus that drove demand for emerging-market assets.

Inflation in Africa’s biggest economy, led by higher fuel prices and a weakening rand, probably accelerated to 6.4 percent in August from 6.3 percent in July, a report by the Pretoria-based Statistics South Africa will show at 10 a.m., according to the median estimate of 23 economists surveyed by Bloomberg. The U.S. central bank is forecast to taper its monthly asset purchases to $80 billion from this month from $85 billion.

An amount of “$10 billion or less in tapering would be positive for the rand, anything more would be negative,” John Cairns, a currency strategist at FirstRand Ltd. (FSR)’s Rand Merchant Bank unit, said in an e-mailed note to clients today.

The rand weakened 0.3 percent, halting three days of gains, to 9.8288 per dollar by 9:40 a.m. in Johannesburg. It’s lost 14 percent this year, making it the second-worst performer among 24 major emerging-market currencies tracked by Bloomberg after Argentina’s peso. Yields on 10.5 percent rand-denominated government bonds due December 2026 fell were little changed from yesterday’s close at 8.152 percent.

To contact the reporter on this story: Jaco Visser in Johannesburg at avisser3@bloomberg.net

To contact the editor responsible for this story: Vernon Wessels at vwessels@bloomberg.net

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