Free Trial

Pressure to Slow CNY Appreciation Could Weigh On ZAR Going Forward

SOUTH AFRICA
  • Local yields open lower in the front & belly after bear steepening yesterday (30Y -8.6bp).
  • 2Y still looking to drift lower, with swaps broadly mirroring SAGB price action.
  • Pressure still remains on the back end of the curve, but may ease with more favourable risk sentiment today.
  • USD/ZAR clawed back some of yesterday's upside towards 15.10, but has drifted back above 15.00. News that no change in restrictions is due today may support some downside back towards 14.80, but USD side factors should dominate.
  • Interesting to note unidentified analysts in Chinese state newspapers saying CNY appreciation may slow, which another China analyst called "a classic piece of indirect currency intervention" after this morning's firmer fixing vs USD.
  • USD/ZAR's close correlation to USD/CNY means slower appreciation could also limit ZAR strength going forward, but remains to be seen how much CNY appreciation slows by.
  • 1Y SA basis swaps continue to rise alongside 1m implied volatility, CDS uptick stalled this morning.
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.