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USD/ZAR Rallies Sharply as Report Suggests ANC Could Change SARB Mandate

SOUTH AFRICA
  • USD/ZAR rallies sharply as Bloomberg report that the ANC want to change the SARB's mandate and are to seek a constitutional amendment. The piece quotes ANC chairman Mantashe, who argues that "The mandate of the Reserve Bank has to be expanded to meet the needs of the economy".
  • USD/ZAR immediately spikes on the report, with the pair rallying to touch 17.3994 and extend recent outperformance. The bulk of the rally comes as the market clearly buying into the view that a mandate change would result in pressure on the bank for slower rate hikes / a lower peak rate.
  • Recall the draft policy proposals published yesterday included a pledge to "reaffirm SARB independence". Unclear whether that clashes with this element of the story:
  • "Godongwana may alternately seek to appease members of his party by stressing the need for flexibility in policy making to Reserve Bank Governor Lesetja Kganyago."

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