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JOHANNESBURG. — The rand perked up yesterday morning, making a good impression at the start of a busy week, the highlight of which will be the Reserve Bank’s monetary policy committee’s decision on interest rates on Thursday. The committee, which is widely expected to leave the repurchase rate unchanged, is likely to flag the renewed volatility in the currency, which has the potential to shape the outlook on inflation.

The rand has been volatile since the last rate-setting committee meeting in March, swinging from highs of 12,31 to the dollar to lows 13,95 to the dollar when Pravin Gordhan was fired as finance minister in a controversial Cabinet overhaul. But a relatively favourable sentiment towards emerging markets has helped cushion the local currency against the blows of local politics, which prompted the S&P Global Ratings and Fitch in March to downgrade the country’s debt.

“Event risk is concentrated from Wednesday evening through Thursday. US Federal Reserve minutes are the highlight, with markets looking for signs on how it plans to unwind its asset book. We expect the (bank) to be neutral to dovish as it assesses a better inflation outlook, but the scope for cuts remains constrained by the domestic political situation,” Rand Merchant Bank currency strategist John Cairns said in a note.

Domestic inflation has been moderating since its peak at 7 percent in February 2016. Statistics SA will update the figures for April on Wednesday.

At 9.49am, the rand was at 13,1893 to the dollar from Friday’s 13,2289, at 14,7398 to the euro from 14,8145 and at 17,1136 to the pound from 17,1972. The euro was at $1,1175 from $1,1204. — BDLive.