The rand strengthened on Thursday as data showed domestic consumer inflation accelerated last month, boosting the prospect of further interest rate hikes.

At 08:35, the rand was trading at 16.85 rand per dollar, up 0.5% from its previous close.

Traders are bullish on interest rate hikes after data from Statistics South Africa showed consumer inflation rose to 7.8% year-on-year in July.

Fuel and food prices continue to be the main drivers of price pressure, which has increased sharply worldwide due to the war in Ukraine.

Local investors will now focus on the July producer inflation data, which will be released later in the day, to get a deeper picture of the state of the economy.

The dollar index, which measures the U.S. currency against six rivals, fell 0.58% to 108.00 as investors braced for the U.S. Federal Reserve’s annual conference in Jackson Hole on Friday to see how much future interest rate hikes could be sharp.

The government’s benchmark 2030 bond rose in early trade, with the yield down 4 basis points to 10.260%.

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