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Rand Tad Firmer Ahead Of Closely Watched SARB Rate Decision

ZAR

Spot USD/ZAR changes hands at 17.8038, down ~650 pips on the day, in the lead-up to the announcement of the outcome of a live SARB meeting. The pair remains heavy, but its recent sell-off has lost some steam. The next bearish target is Mar 31 low at 17.6993.

  • The PBOC tweaked its rules on cross-border funding of companies and financial institutions to lure capital inflows, while continuing to lean against yuan weakness via its daily mid-point fixings. These supportive measures provided a highlight of the overnight session, supporting risk sentiment.
  • The commodity complex is showing some strength, with the composite BBG Commodity Index up ~0.7% as we type. The precious metals subindex sits ~0.2% higher on the day, as spot gold is ~$6.2/oz. better off.
  • Participants are preparing for the SARB rate decision today. The decision is expected to be close as yesterday's below-forecast CPI data dampened expectations of a rate hike. The consensus call in a Bloomberg survey is for a 25bp hike but the market is now pricing only a modest chance of such an outcome.
  • The announcement that Russian President Putin will not attend the upcoming BRICS summit in person provided some reprieve on the political risk front, saving South Africa a legal dilemma over an ICC arrest warrant issued against him.

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