Rand Fluctuates As Participants Weigh GDP Data, Kganyago's Testimony

Spot USD/ZAR has oscillated between gains and losses today, struggling for a clear direction. The pair last trades at ZAR19.2705, down 60 pips on the session.

• Local-currency bond yields have dropped across the curve, revisiting levels last seen before South Africa's diplomatic tensions with the U.S. resurfaced on May 11. Appealing valuations and a strong bond auction yesterday may have lured investors anew, helping push yields lower.
• Data released this morning showed that South Africa avoided a technical recession as its economy grew 0.4% Q/Q in the first three months of the year, which followed a revised 1.1% contraction in 4Q2022. The outturn was in line with the SARB's forecast and the median estimate in a Bloomberg poll. Statistician General Risenga Maluleke said a rebound in mining and manufacturing, which make up for over a fifth of GDP, helped boost the headline figure.
• SARB Governor Lesetja Kganyago told lawmakers that the central bank will only be able to lower interest rates once it "beats the monster of inflation." The official added that doubts over South Africa's non-aligned stance on the Russo-Ukrainian war prompts the market to already behave as if secondary sanctions were going to be slapped on the country.
• Eskom eased power outages and announced that it will suspend load-shedding during the day and only move to Stage 3 in the evenings until further notice.