Rand Depreciates Despite Industrial Output Beat

Spot USD/ZAR has extended gains despite largely sideways price action of the BBDXY index and a better-than-expected industrial output outturn in South Africa. The rate last deals at ZAR17.0712, up ~1,440 pips on the day, with bulls setting their sights on Jan 6 high of ZAR17.4343.

• South Africa's manufacturing production contracted 1.1% Y/Y in November versus the expected 3.5% decline, while monthly growth at +2.0% beat forecasts, despite continued load-shedding.
• The media briefing with the nation's Health Minister did not offer much in the way of negative surprises either. The official said that the are no signs of a major uptick in COVID-19 cases, albeit South Africa has been advised to boost testing and will expand eligibility for vaccine boosters.
• BNP Paribas boosted their SARB rate-hike call and now expect a 50bp rate rise this month and another 25bp one in March. They had previously been forecasting just 50bp worth of rate hikes this year. This stands in contrasts with yesterday's call change from ABSA, who said they now see the SARB raising the policy rate by 25bp this month (prev. 50bp).