The South African central bankers are getting together for their first monetary policy meeting in 2023 today. A hawkish SARB is unlikely to lift the Rand, according to economists at Commerzbank.

The Rand is under pressure due to domestic risks

“Usually the Rand is able to benefit from a hawkish SARB, above all in a less risk-averse environment which entails reduced USD strength. However, the Rand is under pressure due to domestic risks, as the bumpy start into 2023 demonstrates, above all the governing ANC’s demands for an extended SARB mandate as well as the energy crisis caused by massive power outages.”

“The joint military exercises with the Chinese and Russian army planned for mid-February are also likely to cause exasperation amongst ZAR-investors.”

“Everything all told possible ZAR gains as the result of a surprisingly hawkish SARB are therefore likely to be limited.”