Rand Loses Ground, Extends Losses After Weak Q4 GDP Data

Spot USD/ZAR edged higher after President Cyril Ramaphosa reshuffled his Cabinet, retesting session highs as South Africa released below-forecast GDP figures. The rate last deals at ZAR18.3123, up ~640 pips on the day, with bulls looking for gains past Feb 28 high of ZAR18.5147 and towards Oct 13 high of ZAR18.5815. Conversely, bears see the 20-EMA at ZAR18.0694 as their initial target.

• South Africa's Q4 GDP data turned out notably worse than expected as rolling power outages took their toll on economic growth. In the final three months of 2022, the economy expanded by just 0.9% Y/Y, missing the +2.2% consensus forecast. On a quarterly basis, GDP contracted by 1.3% Q/Q versus -0.4% expected, which marked the steepest decline since 3Q2021.
• The aggregate BBG Commodity Index sits ~0.2% below neutral levels, with the precious metals subindex last seen ~0.2% worse off. Weakness in the commodity space may be applying some pressure to the South African Rand.
• Local-currency bond yields advanced from the off but have now eased off highs. South Africa's 10-year breakeven inflation rate is unchanged at 6.23%.