UPDATE 1-South African rand firms after US inflation data

(Updates prices as of 1554 GMT, adds analyst comment in paragraphs 3 and 5)

JOHANNESBURG, Oct 10 (Reuters) – The South African rand firmed against the dollar on Thursday after data showed a slight decline in U.S. inflation in September, keeping the Federal Reserve on track to cut interest rates again next month.

At 1554 GMT, the rand traded at 17.53 against the dollar , about 0.7% stronger than its previous close.

“This initial strength (in the rand) likely reflects investor optimism that the slightly softer (U.S.) inflation numbers could lead to a rate cut, making emerging markets like South Africa more attractive,” said Wichard Cilliers, head of market risk at TreasuryONE.

Data on Thursday showed that in the 12 months through September U.S. consumer inflation rose 2.4%, the smallest gain in more than 3-1/2 years though economists had expected a 2.3% increase.

“Despite inflation being above expectations, there are signs that the economy is slowing, particularly with higher unemployment claims, and the Fed is widely expected to cut rates to stimulate growth,” Cilliers said.

Domestic economic data on Thursday was mixed, with August mining production rising 0.3% year on year but August manufacturing output falling 1.2% year on year.

On the Johannesburg stock market, the Top-40 index closed little changed.

The benchmark 2030 government bond was marginally stronger, with the yield down 3 basis points to 9.14%. (Reporting by Tannur Anders and Bhargav Acharya; Editing by Alexander Winning and Jonathan Oatis)

(c) Copyright Thomson Reuters 2024. Click For Restrictions – https://agency.reuters.com/en/copyright.html