The rand weakened against the dollar early on Friday after a smaller-than-expected rate hike from the South African Reserve Bank (Sarb).

At 10:09, the rand traded at R17.22 against the dollar.

“The less hawkish stance was immediately evident in the performance of the rand, which depreciated on the more balanced or slightly less hawkish guidance,” ETM Analytics said in a note.

The increase by 25 basis points to 7.25% was smaller than the 50-bp hike expected by the majority of economists polled by Reuters, following three 75-bp hikes in a row as the bank tried to pull inflation back from a 13-year peak struck in the middle of 2022.

The decision suggests South Africa has reached the peak in interest rates, ETM said, adding that at worst, there might be another 25-bp hike left.

The government’s benchmark 2030 bond was weaker in early deals, with the yield up 2.5 basis points to 9.665%.