USD/ZAR Pierces ZAR19.00 Amid Concerns Over Energy Crisis, China's Growth Momentum

USD/ZAR has now taken out the psychological ZAR19.00 level which has remained intact since 2020 as participants dump the rand amid South Africa's ongoing energy crisis and worrying signals surrounding China's economic recovery. The pair last deals at ZAR19.0066, up ~1,360 pips on the session, with bulls targeting Apr 6, 2020 high of ZAR19.3508.

• The focus overnight fell on China's inflation data, with CPI coming in at +0.1% Y/Y versus +0.3% expected. Aggregate financing and new loans figures also undershot forecasts, adding to a range of indicators pointing to the fragility of underlying growth momentum.
• Energy shortages crippling South Africa's economy continue to provide a source of concern, with Rand Merchant Bank revising their 2023 GDP growth forecast to -0.8% Y/Y from +0.3%, as they expect "regular bouts of Stage 8 load-shedding and interest rates rising higher than originally expected," including a 25bp rate hike in May.
• Separately, SARB Deputy Governor Kuben Naidoo said in a speech that the central bank is close to the end of the tightening cycle. Naidoo attributed the ZAR's weak performance to idiosyncratic shocks, primarily persistent power cuts.
• On the data front, South Africa's mining production unexpectedly rose 6.5% Y/Y in March, defying expectations of a 0.6% contraction. Manufacturing output data will be published at the top of the hour.