Rand Extends Gains Amid Russia Reprieve, Hawkish SARB Messaging

Spot USD/ZAR is losing altitude for the second consecutive day, with the risk switch flicked to on. The pair last deals at ZAR18.5125, around 1,380 pips lower on the day. A dip through Jun 16 low of ZAR18.1250 would allow bears to set their sights on the ZAR18.00 figure. Bulls look for a rebound above the 50-DMA at ZAR18.8001, which limited gains over the past two trading days.

• Reports in South African press suggesting that Russian President Putin could skip the upcoming BRICS summit hosted by the sub-Saharan nation may have supported the rand at the start to the week. Putin's absence would allow South Africa to avoid a legal dilemma related to his ICC arrest warrant.
• SARB Governor Lesetja Kganyago told CNBC that the central bank will continue to deploy monetary policy tools to anchor inflation and inflation expectations at +4.5% Y/Y, the mid-point of the target range. The Governor reiterated his view that it is better to take decisive action early to avoid having to deliver more tightening later.
• South African local-currency bond yields have eased across the curve, with 10-year breakeven inflation rate dropping to a new cyclical low of 6.54%.