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SARB Hike Sees Little Change in USD/ZAR, Sell-Side Sees Gradual Hiking Cycle Ahead

SOUTH AFRICA
  • USD/ZAR trades -0.30% lower, broadly tracking early selling pressure on the BBDXY.
  • The cross rose +0.86% in yesterday's session, topping out at 15.7657 on a resurgent USD following the largely muted post-SARB reaction.
  • Despite very moderate CPI upgrades to the outlook and downgrades to medium-term growth forecasts, the MPC narrowly voted to hike +25bp, and stick to "gradual" increases in the policy rate to keep expectations well-anchored going forward.
  • The primary risk factors that tipped the scales on inflation were: energy, other administered prices, ZAR depreciation and wage demands, which the MPC seemingly sought to front run with the next meeting only in January 2022.
  • The sell-side mostly sees a range of +75-150bp in hikes pencilled in for SA in gradual +25bp increments throughout 2022.
  • With the hike having little material impact on USD/ZAR, the cross should continue to trade in line with global risk sentiment today – against a USD backdrop that is becoming increasingly challenging for EM FX.
  • Although it isn't registered in the calendar, Fitch may also issue a rating on SA this evening based on the May '21 & Nov '20 dates.
  • Intraday Sup1: 14.4730, Sup2: 15.3532, Res1: 15.6638, Res2: 15.7657
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com
BulletEM BulletEmerging Market NewsHomepage
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com
BulletEM BulletEmerging Market NewsHomepage

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