South African Rand: Rate hold seen hurting currency – Commerzbank

Commerzbank’s Volkmar Baur writes that despite South Africa’s reasonable recent performance under pressure from the Iran conflict, the central bank’s July decision to leave its key rate unchanged was surprising. With reform momentum slowing and the policy anchor weakened, he expects the South African Rand to suffer from this stance for an extended period.

Policy surprise undermines Rand support

"Although the South African economy is grappling with the effects of the Iran conflict, it has performed reasonably well in recent months."

"While the government’s reform momentum has slowed somewhat, the central bank had served as a reliable anchor."

"This made its decision in July to leave the key interest rate unchanged all the more surprising."

"The ZAR is likely to suffer from this for some time to come."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)