South Africa's rand firms ahead of inflation data

South Africa's rand inched higher on Wednesday ahead of the release of consumer inflation figures and a backdrop of a stronger dollar that has seen the local unit suffer sharp losses in recent sessions.

At 0630 GMT, the rand was 0.07% firmer at 14.9930 against a close of 15.0030. The rand has fallen more than 7% since beginning of the year and about 2% in the previous week.

Against a basket of currencies, the greenback held at a four-month high, benefiting from continued fears over the impact of the coronavirus outbreak on China's economy.

Locally, consumer price-growth figures, due at 0800 GMT, are set to show a slight uptick but remain well below the central bank's upper target of 6%.

"Local core CPI will only be of any interest to the market if it is in any way higher than market expectations," said Warrick Butler, chief trader at Standard Bank, in a note.

Falling prices, partly due to slack economic activity, have allowed the central bank to reduce lending rates to their lowest since 2015, while maintaining a competitive real return rate due to falling rates in the U.S. and developing markets.

Low inflation against relatively high lending rates has supported the rand's attractiveness as a carry-trade target with yield-hungry investors happy to ignore local risks for higher returns.

"FOMC (Federal Open Market Committee) minutes this evening will be of greater importance with the market comfortably pricing in 2 further U.S. rate cuts this year, despite some stronger economic data of late," said Butler.

Investors will be on the lookout for the minutes of the Federal Reserve's January meeting for insight into its thoughts about the risks posed by the virus and the direction of monetary policy. The report is due at 1900 GMT.

Bonds were flat, with the yield on the benchmark 2026 government issue up 0.5 basis points at 8.005%.

In equities, Sibanye-Stillwater reported an annual earnings loss of 40 cents per share, hit by strike-related losses in the first half of the year.

Food services firm Bid Corporation Ltd (Bidcorp) reported a 4% rise in half-year headline earnings, as strong performance of its businesses in Europe and New Zealand outweighed weaker operations elsewhere.

(Reporting by Mfuneko Toyana; Editing by Amy Caren Daniel)