Rand On Defensive Amid Wider Greenback Strength, S. African Inflation Expectations Moderate

Spot USD/ZAR trades at 18.9868, around 400 pips higher on the day, with bulls looking for continued gains towards Feb 23 high of 19.3899. On the flip side, the focus falls on Mar 13 low of 18.5066, followed by Dec 29 low of 18.2550.

• South Africa's 2024 inflation expectations fell 0.3pp to +5.4% Y/Y, with the figure for 2025 dropping by the same amount to +5.3% Y/Y and with expected 2026 CPI growth down 0.4pp to +5.2% Y/Y. A moderation in anticipated price hikes will be a welcome development for the SARB ahead of next week's rate decision, even as they prefer to anchor inflation expectations at the +4.5% Y/Y mid-point of the target range. The CPI report for February will provide more information on the inflation picture tomorrow.
• The composite BBG Commodity Index has shed 0.3%, with precious metals on the back foot (-0.5%) as gold is testing the $2,150/oz. figure.
• SAGB yields are a touch lower at typing, with 10-year breakeven inflation rate now unchanged at 6.81% after refreshing cyclical highs.