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ZAR Forex Report - 29 March 2016

It was a short week with not many trading days as markets locally and globally were closed for the Easter holidays. The ZAR was range bound after strengthening towards the end of the previous week as the SA Reserve Bank hiked the benchmark repo rate by 25 basis points to a level of 7%...

Last week on Wednesday the latest inflation figures were released: Annual consumer price inflation was 7% in February 2016, up from 6.2% in January 2016. This is the highest rate since May 2009 when the rate was 8% and most economists believe there is still room for another two rate hikes this year.

The good news is that that the due to the increased rate hikes, and increased opportunity for carry trade, the ZAR has strengthened by 5.5% against the GBP this year – this after falling 29% in the previous year, and 24% against the USD.

This week was also off to a slow start as Monday was a public holiday and Tuesday saw the rand softer with not much local or international data released. The rand has its eyes on the USD, and more specifically, on a speech by the Fed Reserve where it is expected that chair, Janet Yellen, will raise interest rates.

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