Rand Extends Losses After Disappointing GDP Outturn, Gov't Bond Yields Climb Across Curve

Spot USD/ZAR has advanced to last trade at ZAR18.4100, up ~1,620 pips or ~0.9% on the session, as the South African Rand remains under pressure. Familiar technical contours remain intact.

• Local-currency bonds have softened across the curve, defying the lead from stronger core FI markets. The SARB reduced its holdings of South African government debt by the most since the launch of bond-buying operations amidst the COVID-19 pandemic. The central bank said it "chose not to reinvest the proceeds of the maturing 2023 bond or the coupon payments, as it deems the bond market to be functioning adequately." When this is being typed, South African gov't bonds trade 8.1-12.8bp cheaper.
• A bleak Q4 GDP outturn has applied pressure to the Rand today, helping it become the worst EMEA performer today. The 1.3% quarterly contraction was deeper than expected by all economists polled by Bloomberg, not just the median estimate of -0.4%. The data revealed the impact of intensified load-shedding on the local economy.