Rand Underperforms EMEA Peers, Kganyago's Comments Under Scrutiny
USD/ZAR is ticking higher as the market digests latest comments from SARB Governor Kganyago. The greenback's recovery has facilitated the pair's upswing, albeit the BBDXY Index has only just returned to positive territory. The rate last changes hands at 19.4471 (~1,140 pips higher on the day), with bulls looking for a move towards the all-time high of 19.9204. Bears see Sep 20 low of 18.6825 as their initial target.
- Kganyago committed to continued efforts to bring inflation "sustainably closesr to the +4.5% Y/Y that we aim for" and reaffirmed the SARB's data-dependent stance, but later suggested that there is "no reason to keep rates high if CPI has fallen". The Governor mentioned the rand as one of the risks to the inflation path, but also called FX interventions a "futile exercise".
- SAGB yields have eased this morning despite marginal twist steepening of US Tsy curve. South Africa's 10-year breakeven inflation rate has dropped to 7.29%.
- The BBG Commodity Index extends its recent losses, shedding a further 0.3% today. The precious metals subindex is little changed at typing.
- South Africa's August electricity consumption/production data will be published later today.