The rand traded at its best level against the US dollar since December 2015, following better than anticipated retail sales.
According to Stats SA, retail trade sales increased by 4.1% year-on-year in February 2016.
The highest annual growth rates were recorded for:
- Retailers in pharmaceuticals and medical goods, cosmetics and toiletries (7.8%);
- General dealers (5.5%); and
- Retailers in textiles, clothing, footwear and leather goods (4.2%).
The main contributors to the 4.1% increase were:
- General dealers (contributing 2.2 percentage points);
- Retailers in textiles, clothing, footwear and leather goods (contributing 0.8 of a percentage point); and
- Retailers in pharmaceuticals and medical goods, cosmetics and toiletries (contributing 0.5 of a percentage point).
Shortly after 17h00, the local unit traded at R14.56 versus the dollar, up nearly 1% on the day – its best level since 9 December last year, according to Thomson Reuters data.
Reuters reported that better trade numbers suggest that the central bank might hike interest rates further at its next policy meeting.
“The better than expected performance of February retail sales is somewhat encouraging and suggests some underlying resilience in the South African consumer,” BNP Paribas Securities economist Jeffrey Schultz said.
The South African Reserve Bank raised its benchmark repo rate by 25 basis points to 7% last month, warning that additional hikes should be expected in 2016.