Investors Pare Rate-Rise Bets on Inflation: Johannesburg MoverAndres R. Martinez
South African forward-rate agreements, used to lock in borrowing costs, dropped the most since August as investors pared bets the Reserve Bank will need to raise lending rates to curb inflation.
The contract starting in 12 months declined 11 basis points to 5.04 percent by 4 p.m. in Johannesburg, according to data compiled by Bloomberg. Inflation was unchanged in March at 5.9 percent from a month earlier, Statistics South Africa said today. The median estimate of 20 analysts surveyed by Bloomberg was 6 percent.
“These numbers suggest we aren’t dealing with runaway inflation,” Nicky Weimar, an economist at Nedbank Group Ltd. in Johannesburg, said by phone. “The possibility of higher rates have been postponed.”
The Reserve Bank has kept its benchmark lending rate at the lowest level in more than 30 years since July as inflation remains near the top of the bank’s target of 3 percent to 6 percent, limiting the room to cut borrowing costs. The rand, the most volatile of the world’s 16 major currencies tracked by Bloomberg, has dropped 7.4 percent against the dollar this year.
The yield on the rand bond due in December 2026 fell 14 basis points, or 0.14 percentage point, to 6.92 percent. The rand weakened 0.4 percent to 9.1638 per dollar.