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South African Rand Recovers ahead of Local Inflation Data

JOHANNESBURG, Dec 12 (Reuters) - The South African rand recovered slightly against the dollar on Tuesday as local traders fixed their eyes on inflation at home after softer U.S. consumer inflation data.

At 1455 GMT, the rand traded at 19.0075 against the dollar , about 0.4% stronger than its previous close.

The dollar last traded around 0.06% weaker against a basket of global currencies.

The risk-sensitive rand has made a slight recovery after being on the back foot against the dollar on Monday on expectations the U.S. Federal Reserve might not cut interest rates early next year.

Local markets on Wednesday will turn their attention to November inflation figures that could hint at the health of the South African economy, riddled with crumbling rail and port infrastructure and rolling blackouts.

Analysts polled by Reuters predict a drop in year-on-year headline inflation to 5.6%, within the South African Reserve Bank's preferred target range of 3% to 6%.

"While no one has a crystal ball, the rand stands to benefit from the anticipated rate-cutting cycle that is due to come into play towards the second and third quarters of 2024," said Bianca Botes, director and treasury partner at Citadel Global.

Supply-side inflation out of the U.S. softened to 3.1% year-on-year in November, down from 3.2% in October, and in line with expectations. Traders on Wednesday will focus on Fed Chair Jerome Powell's speech following an interest rate decision.

On the Johannesburg Stock Exchange, the blue-chip Top-40 was down about 1.7%. South Africa's benchmark 2030 government bond was stronger, with the yield down 3.5 basis points at 10.100%.

Reporting by Tannur Anders with additional reporting by Rachel Savage; Editing by Bhargav Acharya, Sonali Paul and Shilpi Majumdar

Source: Reuters

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