Swissquote Bank Research Team
Swissquote Bank Ltd
South Africa’s central bank confirmed its dovish policy on Wednesday, lowering its interest rate on repos by 25 basis points to 6.50%, its lowest since January 2016. February’s consumer price index shows that inflation is under control at 4% annualised (January: 4.40%) and is expected to slow in March, as the rand has strengthened since the middle of November 2017 (USD/ZAR: -18.28%). The resignation of President Jacob Zuma (and the stepdown of Zimbabwe’s President Robert Mugabe’s) have boosted the ZAR, thus reducing the cost of imports in the country.
With treasuries gradually nearing investment-grade rankings from all three major rating agencies, South Africa’s economy showing clear signs of improvement. With improved manufacturing and increasing exports in March, we expect GDP growth to head towards the 1.80% range (February: 1.50%). USD/ZAR is trading at 11.82, bouncing back from a 11.62 low earlier this week and continuing its short-term rise toward 11.83.
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This report has been prepared by Swissquote Bank Ltd and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by Swissquote Bank Ltd personnel at any given time. Swissquote Bank Ltd is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.
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