South African rand up

Today’s South African Reserve Bank MPC decision is expected to maintain its Repo rate stable at 6.50% due to moderating inflation expectations within target corridor of 3-6% along with improving framework conditions for EM countries.

Therefore, we expect the SARB to avoid raising rates for now, due to current weak economic condition. However, the economic growth outlook is expected to improve, as the country will be benefitting from a weaker currency, thus improving its export potential. Nonetheless, the SARB will be taking careful attention at the impact of imported inflation, the side effect of depreciating currencies.

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USD/ZAR is currently trading at 14.45, as EM currencies are strengthening across the board. The pair is expected to head along 14.30 in the short-term.

This report has been prepared by AC Markets 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 AC Markets personnel at any given time. ACM 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.