Lower Inflation Target Set to Reshape South African Rand’s Long-Term Path

South Africa’s new lower inflation target is giving the rand fresh momentum, with policymakers and analysts agreeing it could curb a long-term track record of weakness.

Africa’s largest economy last month formally adopted a 3% inflation target long championed by central bank Governor Lesetja Kganyago, aligning the goal more closely with trading partners. The shift — replacing the 3% to 6% target band in place since the turn of the century — has helped pull 10-year bond yields to 2017 lows and put the rand on track for its strongest year against the dollar since 2009.