USDZAR - the rand finding friends hard to come by

The ZAR (South African rand) has come up on the radar as sellers have dominated and a true buyers strike ensues. We’re seeing longer-dated South African govt bonds sell off aggressively, with yields on 25yr government debt rising above 12.5% and the highest levels since 2020.

The energy shortage continues to take a toll on economics and talk of increasing stagflation risks will typically attract currency sellers – the April CPI print (due 24 May) could be important in determining if the SA central bank (SARB) is indeed ready to pause in its hiking cycle, with SARB policy meeting due 25 May. Geopolitical issues are also weighing to an extent with the US ambassador to SA accusing the country of supplying arms to Russia.

Favour buying weakness in USDZAR into 19.05.