Rand stays firmer after lower US inflation

Johannesburg - The rand was slightly firmer on Friday as lower than expected inflation in the United States rekindled bets that the Federal Reserve would delay rate hikes to later in the year.

By 08:50 the rand traded 0.12% firmer to R14.5275/$, giving back some of the gains that lifted it as far as 14.4400 in New York trade towards four-month highs.

Traders said a lack of strong global drivers along with the resumption of a dollar rally had capped the rand's gains.

"The move is 80% rand specific: most risk currencies have range traded over the past few days, held back by the bounce in the dollar," currency strategist at Rand Merchant Bank John Cairns said in a note.

Despite overnight US inflation data that might make the Fed more cautious about interest rate hikes, the dollar managed to make gains.

The rand has gained nearly 3% this week, despite mixed local and global economic data. With no scheduled domestic data releases on Friday the rand would again look to broader emerging market sentiment for its cues, analysts said.

Signs that economic growth in China could stage a recovery despite data on Wednesday showing it expanded at its slowest rate in seven years, also helped soothe risk sentiment, with most emerging Asian currencies rising in early trade.

"The expected range on SA currency today is R14.45 to R14.75," analysts at NKC African Economics said.

Government bonds were flat, with the yield for the benchmark instrument due in 2026 unmoved at 8.965%.