USD/ZAR Turns Bid Again, S. African FRA Curve Shifts Higher

Spot USD/ZAR is tracking higher again, reversing the reaction move seen on the release of U.S. CPI. The pair renewed session/three-year highs at ZAR18.8777 and last changes hands at ZAR18.8715, up ~2,370 pips on the session.

• Local-currency bonds have resumed their sell-off, faltering to fresh session lows, with curve flattening as the short-end suffers heaviest losses. South Africa's 10-year breakeven inflation rate sits at 6.84% at typing.
• South Africa's FRA curve shifted higher, indicating notable hawkish SARB repricing. The 3x6 contracts soared to their best levels in more than a decade, while further out the curve 21x24 contracts are at multi-month highs.
• SARB Governor Lesetja Kganyago said that South Africa's persistent logistical bottlenecks will continue to exert upward pressure on prices, while core CPI inflation will only return to the target in 2Q2025. The Governor specifically mentioned exchange-rate weakness as a factor offsetting the moderation in global energy and food costs.