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South African Rand Price Forecast: ZAR Prepares For SA Inflation, SARB and PBOC Rate Decisions


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Jul 19, 2022 | DailyFX
Warren Venketas, Analyst

RAND TALKING POINTS

  • Possible short-term pullback on the cards for ZAR bulls.
  • SARB rate decision in focus this week.
  • Will R17/$ hold as support?

South African Rand Price Forecast: ZAR Prepares For SA Inflation, SARB and PBOC  Rate Decisions

 

USD/ZAR FUNDAMENTAL BACKDROP

The South African rand has found some respite this morning on the back of a weaker U.S. dollar as money markets revise Fed rate hike expectations lower from 100bps. The week ahead holds several key economic data points for South Africa including inflation and the SARB’s interest rate announcement (see economic calendar below). Inflation has already exceeded the reserve bank’s upper target limit of 6% in May and is expected to climb to 7.2% tomorrow adding to hawkish pressure on SARB to hike 50bps on Thursday. Should inflation data miss expectations I don’t see the SARB being swayed to reduce this 50bps projection alongside an aggressive Federal Reserve. Since the 16.00 upside breakout in late June, inflationary pressures have hurt South African consumers and although hiking rates are not idea, controlling a weakening rand is essential in limiting further inflation downside on the consumer.

USD/ZAR ECONOMIC CALENDAR

South African Rand Price Forecast: ZAR Prepares For SA Inflation, SARB and PBOC Rate Decisions

Source: DailyFX Economic Calendar

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