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USD/ZAR Holds Below 15.00 With SARB Expected to Stick to +25bp Hikes

  • USD/ZAR trades +0.02% higher this morning, with price action getting choppy around the 15.00 handle and the 200dma at 15.0597.
  • The cross closed -0.41% lower w/w as early optimism on Ukraine talks was tempered into the weekend with both sides still far apart on neutrality/territorial demands in negotiations.
  • SA’s terms of trade narrowed sharply on plunging metals prices – falling to YTD lows and will likely weigh on ZAR if they remain low against rising oil prices.
  • This week’s focus shifts to CPI data with headline expected to rise to 5.8% y/y in Feb, but is not expected to move the SARB to accelerate its tightening cycle just yet.
  • Consensus remains for a +25bp hike with the SARB cautious not to pre-emptively hobble growth on an exogenous rise in energy prices. Markets expect hawkish revisions to average CPI for 2022/23 – rising closer to the 6% upper band of the target range.
  • Recent ZAR strength has limited FX passthrough to inflation and should temper the need for accelerating the hiking cycle for now, but we cannot fully discount a +50bp step.
  • Intraday Sup1: 14.9133, Sup2: 14.8548, Res1: 15.0603, Res2: 15.1431
  • Citi Terms of Trade

MNI London Bureau | +44 020-3983-7894 |
MNI London Bureau | +44 020-3983-7894 |

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