JOHANNESBURG (Reuters) - South Africa’s rand trimmed its losses against the dollar on Thursday, after the central bank cut lending rates for a fifth time in a row to support an economy strangled by the COVID-19 pandemic.
At 1510 GMT the rand was 0.47% weaker at 16.5500, after hitting a session low of 16.6900 before the rate decision.
The central bank’s five-member monetary policy committee (MPC) voted 3 to 2 for a 25-basis points rate cut to a new record low of 3.50%.
“It’s clear that the balance on the MPC is becoming less dovish. Of the five MPC members, two voted for no change in rates,” said William Jackson, chief emerging markets economist at Capital Economics.
“That was reflected in the language in the accompanying statement too. Whereas the risks to the inflation outlook were described as ‘to the downside’ at the last meeting, this time they were described as ‘balanced’”.
The central bank forecast gross domestic product to contract 7.3% in 2020, from an earlier prediction for a 7.0% contraction.
South Africa has recorded the most coronavirus cases in Africa, with total infections just shy of 400,000 and rising by more than 10,000 a day recently.
The Johannesburg Stock Exchange (JSE) ended the day higher boosted by the rate-cut decision and positive sentiment across global markets.
The benchmark FTSE/JSE All Share Index ended up 0.46% to 56,090 points while the FTSE/JSE Top 40 Companies Index went up 0.56% to close at 51,702 points.
Bonds firmed, with the yield on the benchmark 2030 issue down 12.5 basis points at 9.11%.
Reporting by Olivia Kumwenda-Mtambo and Promit Mukherjee; Editing by Lisa Shumaker