The South African rand strengthens by about 0.8% against the US dollar as PPI slows to 7.5%, lower than expected; fiscal surplus boosts market sentiment.

⑴ On Thursday, the South African rand strengthened by about 0.8% against the US dollar, trading at 16.5275, mainly supported by the overall weakness of the US dollar while the market digested lower-than-expected Producer Price Index data. ⑵ According to data from Statistics South Africa, the June PPI year-on-year growth slowed to 7.5% from 7.8% in May, below the market expectation of 7.9%. Analysts believe the main drag was falling fuel and food prices. ⑶ Nedbank economists expect that, supported by favorable base effects, controlled food prices, and structural reforms, the PPI is likely to continue to retreat moderately in the second half of the year. On the same day, the South African Treasury announced a budget surplus of about 80.1 billion rand (approximately 4.8 billion US dollars) for June. ⑷ The Johannesburg Stock Exchange Top-40 Index rose about 1.3%, the benchmark 2035 government bond yield fell about 3.5 basis points to 8.61%, and both the rand exchange rate and the bond market responded positively to the easing inflation and fiscal data.