The rand was relatively stable on Wednesday morning, showing little reaction to the latest inflation figures, which caught the market off guard.
Inflation, which the Reserve Bank closely monitors to decide on interest, moderated to an annual pace of 3.8% in March, from 4% in February. Economists had anticipated a slight pick-up in inflation.
"If inflation continues to surprise to the downside, questions will be raised if the Reserve Bank has space to further cut interest rates. So far, the Bank has been fairly conservative in its outlook," ETM Analytics market analyst Halen Bothma said.
Reserve Bank governor Lesetja Kganyago cut rates by 25 basis points in March, only the second in five years.
The transport component of CPI decreased from 0.5 of a percentage point in February to 0.4 of a percentage point in March. The index increased 2.8% year-on-year.
Items in the CPI basket, which became cheaper in March compared to the same month in 2017, included bread and cereals, with deflation of 4.8%, fruit with deflation of 5.5%, and oils and fat with deflation of 1.4%.
The price drops helped mitigate meat inflation of 10% to bring average food inflation to 3.6%.
The rand has oscillated around the R12/$ level for days, signalling consolidation following a strong run in the past two quarters, which were largely attributed to optimism about the revival of the economy.
At 10.32am, the rand was at R12.0032 to the dollar from R11.9835, R14.8359 to the euro from R14.8205 and at R17.0862 to the pound from R17.1243.
The euro was at $1.2360, from $1.2369.
With Sunita Menon
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