JOHANNESBURG – The South African Reserve Bank has unexpectedly hiked its landing rate by 50 basis points to 5.5 percent, citing exchange rate pressures that are expected to intensify.
It is the first change in the repo rate of Africa's biggest economy since July 2012 and the first hike in almost six years.
The interest rate was reduced by 50 basis points to 5 percent in July 2012 and has been unchanged since then with the central bank saying it wanted to continue supporting consumer business and the weak economy.
The South African rand dropped to 11.25 to the dollar this week. Reserve Bank Gov. Gill Marcus announced the new repo rate Wednesday aimed at stabilizing the currency and said a weak rand would inevitably impact inflation.