The South African rand gained ground in early trading on Monday following the release of unexpectedly strong money supply and private sector credit growth figures. The currency advanced ahead of key trade and budget balance reports scheduled for later in the day.
By 0642 GMT, the rand was trading at 17.6950 to the U.S. dollar, marking a 0.6% increase compared to its closing level on Friday.
According to figures published by the South African Reserve Bank, money supply growth in May reached 6.86%, up from April’s 6.12%. Private sector credit expanded by 4.98% in May, compared to 4.60% the previous month.
These results defied expectations from Nedbank economists, who had projected year-on-year declines in both indicators.
Money supply trends are often seen as a gauge of consumer spending power and could offer clues about upcoming trade data. A report due later on Monday is expected to show that South Africa’s trade surplus expanded last month, driven by a sharper rise in exports relative to imports.
In a research note, Nedbank analysts noted that import levels remain supported by a stable domestic backdrop, citing easing inflation, falling interest rates, and a steady rand as contributing factors to increased demand.
Market participants are also watching for May’s budget balance figures, which are expected to offer further insights into the country’s fiscal position.
Meanwhile, South Africa’s benchmark government bond maturing in 2035 showed early strength, with the yield dropping 3 basis points to 9.93%.