The USD/ZAR currency pair hovered just above a fresh 3-week low of 18.4876 on Wednesday, as the Rand remained firm against a broadly weaker US Dollar after the latest CPI data out of South Africa.

Annual consumer price inflation in South Africa has eased to 2.7% in March from 3.2% in February, against market consensus of 2.9%. It has been the lowest inflation rate since June 2020, as it fell below the lower bound of the South African Reserve Bank’s 3% to 6% target range.

The country’s annual core CPI inflation, which excludes volatile categories such as food and non-alcoholic beverages, fuels and energy, slowed to 3.1% in March, its lowest level since September 2021.

Despite that local inflation has been brought well under control, the South African Reserve Bank kept its main lending rate without change in March following three straight rate cuts, as it cited risks from the global trade war and the South African budget fallout.

In its biannual review of monetary policy, the SARB said its confidence about the medium-term inflation outlook had diminished considerably and the scope for further rate cuts had narrowed.

Meanwhile, the US Dollar was softer, as market players fretted over the future direction of the US economy and the Federal Reserve’s monetary policy.

Investors remained attuned to signals suggesting a potential shift towards a more accommodative stance by the Fed. Data from the CME Group’s FedWatch Tool indicated that market participants were increasingly pricing in the possibility of multiple interest rate cuts by the Federal Reserve this year.

The USD/ZAR currency pair was last down 0.07% on the day to trade at 18.5672.