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ZAR Weakness Adds Weight to Hawkish Arguments for a +50bp SARB Hike This Week

SOUTH AFRICA
  • USD/ZAR trades +0.36% higher this morning, holding a choppy course below last week’s highs at the start of play.
  • Local CPI data will be the focal point of the week ahead of the SARB meeting. Here, a firmer print would add weigh to calls for a +50bp hike, while a softer print may inject some uncertainty but likely not change the decision in the absence of a major downside surprise.
  • Recent ZAR weakness and a willingness not to fall behind the Fed may be the straw that breaks the camel’s back in terms of shifting the 3-2 consensus for the +25bp hike seen in the March meeting – however, this will undoubtedly be a close call decision.
  • Beyond this meeting, the SARB may not look to continue with 50bp steps unless the inflation outlook deteriorates markedly.
  • US retail sales & industrial production data will be eyed for USD-side drivers this week. Similar to last week, USD/ZAR remains vulnerable to shifting risk sentiment with a move above 13.2706 opening up 16.3668 (Nov 2021 high).
  • Intraday Sup1: 16.1331, Sup2: 16.03338, Res1: 16.2706, Res2: 16.3668
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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