ZAR unable to benefit from rate hike

The SARB delivered what the market expected and raised the key rate by 25bp to 6.0% yesterday. The recently surprisingly moderate inflation rate of 4.7% did not cause the central bankers to wait and see. Its approach would not allow that anyway as the central bank continues to see the rand as a risk factor for the inflation outlook. The fact that the rand was unable to benefit from the rate hike yesterday is probably not just due to market expectations. 

According to Commerzbank, after all inflation is likely to rise again due to base effects and as a result real interest rates will then fall again, thereby, ZAR will be under pressure in the near future. Therefore, the bank suggests falls in USD-ZAR should be used as buying opportunities.