JOHANNESBURG (Reuters) -The South African rand edged up on Wednesday after steady domestic inflation data and stronger-than-expected retail sales figures, as global investors awaited an interest rate decision by the U.S. Federal Reserve later in the day.
At 1511 GMT, the rand traded at 17.96 against the dollar, roughly up 0.4% from Tuesday's close.
The risk-sensitive currency fell more than 1% on Tuesday as hostilities between Israel and Iran led investors towards safe assets, dulling the appeal of the local currency which was also on the back foot for most of Wednesday's trading session.
The local unit gained ground after the country's statistics agency reported that South Africa's inflation rate remained unchanged at 2.8% in May, in line with the forecast by economists polled by Reuters and below the bank's 3% to 6% target range.
The data supports the case for a more accommodating interest rate stance at the monetary policy meeting in July, said Casey Sprake, an economist at Anchor Capital.
Statistics South Africa also released better-than-expected April retail sales figures, which came in at 5.1% compared to 3.1% estimated in a Reuters poll.
The dollar last traded about 0.2% weaker against a basket of currencies as traders expected the Fed to leave rates unchanged, amid persisting tensions in the Middle East.
The Johannesburg Stock Exchange's Top-40 index closed up 0.4%.
South Africa's benchmark 2035 government bond was slightly weaker, with the yield up 1 basis point to 10.12%.
(Reporting by Sfundo Parakozov and Alessandro Parodi; Editing by Andrew Heavens and Ed Osmond)
