The rand was slightly firmer on Wednesday afternoon even though retail sales data were far worse than expected.

Retail sales growth in July fell short of an expected 2%‚ coming in a paltry 0.8%. With such low growth it would be difficult for the Reserve Bank to raise rates this year.

 The Bank said previously it was “pausing” the cycle of lifting rates for now.

At 3.35pm‚ the exchange rate was R14.3386 to the dollar from Tuesday’s R14.3951. It was R16.0978 to the euro from R16.1491‚ and R18.8780 to the pound from R18.9904.

The euro was at $1.1227 from $1.1219 previously.

The rand is expected to weaken should the US Federal Reserve increase rates at its scheduled meeting next week. But Old Mutual Investment group economist Johann Els said the weakness could be muted.

“As a result of a very slow rate hiking cycle in the US‚ the dollar should continue to drift weaker‚” he said.

That should support emerging-market economies and currencies. The rand is also set to benefit from a slightly more optimistic local economic outlook.

“Despite recent political uncertainty‚ there is currently a sharply improved cyclical outlook for SA compared with earlier in the year.”

That had already translated into a more stable rand. Stagflation (low GDP growth coupled with high inflation) had turned out to be milder than expected‚ Els said.

The rand has firmed 7% firmer against the dollar so far this year and gained 17% against the British pound.