Briefly –
- USD/ZAR maintained relentless bullish runs within the last few months.
- SARB will reveal its financial policy move on Thursday.
- South Africa’s inflation gained 7.4% in June.
USD/ZAR has its price hovered around its highest mark since 2022 as markets wait for South Africa Reserve Bank’s upcoming interest rate decision. The pair has climbed over the last four consecutive weeks to trade at 17.40, around 28% beyond 2021’s lowest mark.
SARB Rate Decision
The South African rand maintained downsides on Wednesday while awaiting another SARB rate hike. Reuters interviewed economists. And they expect increased tightening by the bank come Thursday. They see the central bank raising the rates to 5.25%, a 0.50% hike.
Accuracy by the analysts will mean the 5th rate increase since the bank launched rate hikes in November 2021. The timeframe has seen SARB raising the rates from 3.50% to battle surging inflation.
Still, Wednesday’s data indicated that the nation’s inflation climbed from May’s 6.5% to June’s 7.4% in 2022. That represented the highest inflation surge since 2009. Also, it has risen from pandemic-driven lows of 2.2%.
Barring the volatile energy and food products, inflation surged to 4.4% from 4.1%. The increase outperformed the 4.2% median estimate. Also, it was the highest mark in years.
Meanwhile, South Africa’s inflation surged past the SARB’s range. The bank aims to retain inflation at 3 to 6%. Thus, the massive inflation figure will likely trigger SARB to adopt a hawkish stance.
Also, USD/ZAR gained as investors responded to the highly hawkish Fed. The Federal has already executed a 150bp hike in 2022, and analysts bet on another 0.75% surge next week.
USD/ZAR Prediction
USD/ZAR surged to its highest level since 2022 as markets await the coming rate decision by SARB. Meanwhile, the pair climbed towards the 17.27 high. Also, the daily chart shows USD-ZAR rose beyond the 25 and 50 moving averages.
Furthermore, USD-ZAR rallied past the crucial support zone at 16.37, November 2021’s highest mark. The RSI (Relative Strength Index) has swayed beyond the overbought territory. Thus, the USD-rand exchange rate might keep surging, with bulls targeting the crucial resistance near 18.
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