The rand led gains across currencies in Europe, the Middle East and Africa (EMEA), ahead of the South African Reserve Bank’s (SARB) interest rates decision. Photo: Nadine Hutton/Bloomberg
The rand led gains across currencies in Europe, the Middle East and Africa (EMEA), ahead of the South African Reserve Bank’s (SARB) interest rates decision. Photo: Nadine Hutton/Bloomberg

Rand up before SA Reserve Bank’s interest rates decision

By Reuters Time of article published Jul 22, 2021

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THE rand led gains across currencies in Europe, the Middle East and Africa (EMEA), before the South African Reserve Bank’s (SARB) interest rates decision.

The central bank is largely expected to keep interest rates at a record low of 3.5 percent, with the economy under pressure from the pandemic and recent violence.

"Inflation data doesn't provide the Monetary Policy Committee (MPC) a single reason to bring forward policy normalisation, especially in light of recent events (Covid-related restrictions and Zuma riots) which represent marginal downside risk for economic recovery," Credit Suisse analysts wrote in a note.

"We expect the MPC to leave the policy rate unchanged, at 3.50 percent, but hint to the beginning of a policy normalisation cycle closer to the year end."

One-month dollar options on the rand also came off recent peaks, indicating market expectations for a change in policy were largely nil.

The economic hit from the pandemic had prompted most EM central banks to cut interest rates to support growth. But with vaccinations picking up and more economies reopening, several banks have begun hiking cycles.

REUTERS

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