THE rand was stronger against the dollar immediately after the Reserve Bank announced it would raise interest rates 50 basis points.
The announcement, made on Thursday afternoon, brings the repo rate to 6.75% and the prime rate to 10.25%.
At 3.36pm the local currency was trading at R16.2838 against the dollar from a previous close of R16.4431. The rand was trading in a range between R16.31/$ and R16.27/$ before South African Reserve Bank governor Lesetja Kganyago delivered his speech.
Against the euro, the rand was at R17.7862 from R17.9077 previously. It was at R23.3105 against the pound from R23.3855 previously.
The euro was at $1.0922 from $1.0893 previously.
Debt Rescue CEO Neil Roets said the announcement by the Reserve Bank would have a devastating effect on consumers.
“It comes on top of the proposed 8% increase in electricity rates,” Mr Roets said.
There was also a strong likelihood that SA’s staple food — maize meal — may increase as much as 50%, which according to experts was going to mean that many South Africans were going to experience hunger.
The depreciation of the rand, which hit record lows recently, was going to increase the price of all imported goods, including the five-million tonnes of maize, which would have to be imported and then distributed countrywide, he said.
Mr Roets said further repo rate increases would almost immediately translate to price increases for all commodities, including food.