South African Rand Firmer
The South African rand rose to just below 16.5 per US dollar, close to its highest level since late September, mainly supported by a softer US dollar and lower oil prices. Meanwhile, attention remained focused on geopolitical developments, the inflation outlook and the central banks' moves. The South African Reserve Bank (SARB) recently cautioned that second-round effects could cause higher fuel and transport costs to feed through to broader prices, wages and inflation expectations. The risk of a severe El Niño event have added to upside risks, particularly for imported and food inflation. Fuel prices surged to record highs following the October 7 adjustment, surpassing previous peaks recorded in June and complicating the central bank’s efforts to bring inflation back to its 3% target. The central bank raised the rates by 25 bps to 7.25% last month, while markets are pricing in two more increases over the next six months.
5 per US dollar, close to its highest level since late September, mainly supported by a softer US dollar and lower oil prices. Meanwhile, attention remained focused on geopolitical developments, the inflation outlook and the central banks' moves. The South African Reserve Bank (SARB) recently cautioned that second-round effects could cause higher fuel and transport costs to feed through to broader prices, wages and inflation expectations. The risk of a severe El Niño event have added to upside risks, particularly for imported and food inflation.
Fuel prices surged to record highs following the October 7 adjustment, surpassing previous peaks recorded in June and complicating the central bank’s efforts to bring inflation back to its 3% target. 25% last month, while markets are pricing in two more increases over the next six months.