Free Trial

Rand Remains Under Pressure As Energy Crisis Bites

ZAR

Spot USD/ZAR trades above neutral levels, with BBDXY gyrations feeding into the pair's price action. The South African Rand has been a clear underperformer in the EMEA space this week. The rate last deals at ZAR17.2960, up ~195 pips on the day, with bulls looking for a clearance of Jan 6 high of ZAR17.4343.

  • From a cross-asset perspective, local-currency bond yields have crept higher this morning, with 10-year breakeven inflation rate last seen at 6.13%. The local equity benchmark printed new all-time highs before trimming the bulk of initial gains. The commodity complex is slightly firmer, with BBG precious metals subindex operating near cyclical highs.
  • Global recession risks and domestic energy crisis keep the ZAR under pressure, with no near-term solutions to the ongoing power outages in sight. Recent press reports indicate that the discontent with the government's actions on the energy front is growing, with a number of actors threatening legal action.
  • Reminder that the SARB will announce its monetary policy decision next Thursday. Consensus is split between a 25bp and 50bp hike, with most analysts in BBG survey leaning towards a half-point increase, albeit price action of FRA contracts suggests that the beginning of the year has seen slight dovish repricing.

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.