The currency of the largest economy on the African continent dropped to its lowest value in one month against the U.S. dollar after news broke about the nation's inflation rate dropping last month more than anticipated, Bloomberg reports.
The inflation rate registered at 6.3 percent in January and it was 6.1 percent in February, Statistics South Africa indicated.
"Despite some recent warnings from the Governor concerning core inflation, we still expect the Monetary Policy Committee to maintain its accommodative stance until the downside risks to economic growth fade more compellingly in late 2012 and early 2013," states an email authored by chief economist Dennis Dykes with Nedbank Group in Johannesburg to Bloomberg.
China, the globe's biggest consumer of exports from South Africa, is likely to see manufacturing constrict in March, which would mark the fifth consecutive month of contraction, which pulled down the value of the rand early in the trading session on Thursday.
Government bonds issued by South Africa increased on Thursday after the report about inflation emerged, according to Reuters. The Reserve Bank of South Africa is less likely to increase interest rates this year.
This material is conveyed as a solicitation for entering into a derivatives transaction.
This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.
Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
Trade recommendations and profit/loss calculations may not include commissions and fees. Please consult your broker for details based on your trading arrangement and commission setup.
You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any third-party trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.