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- ZAR unlikely to gain significant ground against the USD – Commezbank
ZAR unlikely to gain significant ground against the USD – Commezbank
Wednesday’s inflation data illustrated that South African inflation accelerated further in July but was unable to provide much momentum to the rand exchange rates. Economists at Commerzbank expect the ZAR to struggle to gain ground.
Core inflation rises more significantly than expected
“Even though the rise in overall inflation corresponded to Bloomberg consensus expectation at 7.8%, the core rate rose more steeply than expected to 4.6% (consensus: 4.5%), which means it is now slightly above the mean of the central bank’s target range of 3% to 6%. So far only the overall rate exceeded the corridor.”
“There is a lot to suggest that the South African Central bank (SARB) will stick to its hawkish course for now. The next meeting will be held in September. A second 50 bps rate step seems largely priced in on the market, with some even expecting the SARB to take an even larger step.”
“The most important drivers remained global factors (fears of a recession, Fed rate expectations) and above all general risk sentiment. As a result, it is likely to remain difficult for the rand to gain significant ground against the USD.”
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