USD/ZAR

Commerzbank’s Volkmar Baur reports the South African Reserve Bank (SARB) raised its benchmark rate by 25 bps to 7.25%, the second hike this year as earlier expectations for cuts faded with higher Oil prices. Despite the move, South African Rand (ZAR) weakened, largely on Dollar strength.

Commerzbank’s Volkmar Baur expects the South African Reserve Bank (SARB) to deliver a 25 basis point rate hike after surprising markets by holding rates in July.

TD Securities remains constructive on South African Rand (ZAR), noting that domestic headwinds have failed to generate sustained weakness and that USD/ZAR’s downtrend remains intact.

Commerzbank’s Volkmar Baur notes South African inflation surprised on the downside in August, with headline Consumer Price Index (CPI) at 4.3% and core at 4.2%.

Societe Generale strategists highlight that the South African Rand (ZAR) continues to outperform in CEEMEA, gaining about 2.4% versus the US Dollar (USD) in spot terms this month. USD/ZAR is close to breaking below 16.00 for the first time since February.

Commerzbank’s Volkmar Baur writes that despite South Africa’s reasonable recent performance under pressure from the Iran conflict, the central bank’s July decision to leave its key rate unchanged was surprising.