Rand Stays Weaker Amid General Risk Aversion

Spot USD/ZAR extends gains in a risk-off environment, which familiar domestic headwinds increasing the Rand's vulnerability. The pair last changes hands at ZAR17.2321, up ~1,260 pips on the day. A further upswing beyond Jan 6 high of ZAR17.4343 would open up scope for a stronger bullish run.

• Local-currency bond yields have eased off intraday highs but remain elevated across the maturity curve. The FTSE/JSE Africa All Share Index is pulling back from all-time highs printed yesterday at 79,982 and last deals ~0.9% below the opening levels. The BBG Commodity Index has returned to virtually neutral levels.
• The SARB is expected to raise interest rates to the highest levels since 2009 next Thursday, albeit analysts are divided on whether policymakers will hike the key rate by 25bp or 50bp. December CPI data released yesterday printed below the expected levels, but the latest BER survey showed that inflation expectations have increased.