Rand Recoups Losses, Gets Some Reprieve Despite Familiar Domestic Factors

South African Rand has found poise and leads gains in EMEA space at the margin, getting some relief amid plethora of domestic headwinds documented in our earlier updates. Spot USD/ZAR last operates at ZAR17.1852, down ~130 pips on the day.

• The FTSE/JSE Africa All Share Index has reversed its earlier gains and last deals ~0.3% worse off, albeit it remains in close proximity to yesterday's all-time peak.
• Local-currency bonds are consolidating their initial gains and last trade 5.7-10.5bp richer across the maturity curve. The closely watched 10-year breakeven inflation rate sits at 5.90% after bottoming out at a new multi-month low of 5.88%.
• The SARB is widely expected to raise the repo rate tomorrow, yet consensus is split on the magnitude of the hike. In any case, there is growing conviction that the tightening cycle is very mature.