South Africa

Rand trades stronger as SARB holds repo rate steady

JOHANNESBURG - The South African currency was boosted by global risk-on sentiment and a hawkish bias displayed by the Monetary Policy Committee (MPC) according to NKC Research.

Despite some pressure to cut, the South African Reserve Bank (SARB) opted to hold the repo rate, with the rand’s carry appeal further strengthened by a favourable external backdrop.

High-beta emerging market asset classes remain in a secure place with the key catalysts of China’s credit acceleration and a resurgent global industrial cycle providing core fundamental support.

A vaccine rollout in developed market majors is likely to lead to a benign external demand environment for emerging markets, while further declines in the US dollar and strong demand support for industrial commodities add to the positive drivers.

At the close of local trade, the rand quoted 0.45 percent stronger at R14.84/$, after trading in range of R14.76/$ - R14.94/$.

MPC decides to hold rates steady yet again

The Monetary Policy Committee (MPC) of the South African Reserve Bank (SARB) decided to hold rates steady at 3.5 percent upon conclusion of its first meeting for 2021.

The decision to hold was in line with consensus. Two members of the committee preferred a 25-bps cut and three preferred to hold rates at the current level.


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