Rand Loses Altitude Despite South Africa's CPI Beat

Spot USD/ZAR creeps higher alongside the BBDXY index despite an unexpected acceleration in South Africa's CPI inflation, which printed at +7.1% Y/Y in March (est. +6.9%). This is the second consecutive beat in CPI after it quickened to +7.0% Y/Y in February, despite expectations of a slowdown to +6.8%.

• Core CPI inflation stayed at +5.2% Y/Y in March, matching the median estimate in a Bloomberg poll of economists, albeit it provided a marginal miss (+0.8% vs. +0.9% expected) on a M/M basis.
• The data inspired some hawkish SARB repricing, with the inflation-focused central bank set to announce its next rate decision on May 25. Local FRA contracts have climbed to new cyclical highs.
• Worth noting that the data crossed the wires alongside headlines noting that Nedbank lowered their 2023 growth outlook for South Africa on the back of persistent energy crisis, with power rationing expected to last for another 3-5 years.
• When this is being typed, USD/ZAR trades at ZAR18.2715, up ~1,080 pips on the session. A clearance of Mar 21 high of ZAR18.6132 would expose Mar 8 high of ZAR18.7192. Conversely, bears keep an eye on Mar 31 low of ZAR17.6993.
• Local-currency bond yields have crept higher across the curve, with South Africa's 10-year breakeven inflation rate hitting its highest point since Jan 3.