Rand Lags EMEA Peers Despite Hawkish SARB Talk

Spot USD/ZAR has turned bid this morning on the back of broader deterioration in risk sentiment coupled with weakness in the precious metals space. Overnight, market mood was weighed on by reports surrounding potential fresh US curbs on AI chip sales to China.

• When this is being typed, USD/ZAR trades at 18.6491, almost 1,300 pips higher on the day, with yesterday's losses now virtually erased. Gains past the 50-DMA at 18.8091 would support the bullish case. Bears keep an eye on Jun 16 low of 18.1250, followed by the psychological 18.00 figure.
• Commodities are on the back foot, with the aggregate BCOM Index sitting ~0.4% lower on the session. The precious metals subindex operates ~0.5% below neutral levels.
• SARB Governor Kganyago told Bloomberg that monetary policy will need to remain tighter for longer, as inflation has been more persistent than expected. The central bank monitors the rand's trend, while its model suggests that the domestic currency is undervalued.
• This came after Kganyago told CNBC yesterday that he sees inflation as a bigger risk than overtightening and noted that the central bank will have to deploy monetary policy response as long as price pressures remain elevated.