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26 Feb 2013
Forex Flash: Stronger South Africa GDP pushes ZAR higher – TD Securities
Driven by better performance of the manufacturing, finance, and agriculture industries, South Africa's GDP growth accelerated to 2.5% Y/Y in Q4 vs. 2.3% in Q3, expanding 2.55% for the full year 2012. The upside surprise had a positive effect on rand performance, being the best EM currency today.
“De-correlation of ZAR from the regional trends last week illustrated the strength of local drivers, and that European risks at this stage do not add much weakness to ZAR valuations, given the already short market positioning”, wrote analyst Marcin Budkiewicz, pointing to 20% probability of a rate cut in 5m-8m. “However, with CPI risks mostly skewed to the upside, these expectations are likely to be frustrated at some point”, Budkiewicz added, expecting rates to stay on hold in 2013.
“De-correlation of ZAR from the regional trends last week illustrated the strength of local drivers, and that European risks at this stage do not add much weakness to ZAR valuations, given the already short market positioning”, wrote analyst Marcin Budkiewicz, pointing to 20% probability of a rate cut in 5m-8m. “However, with CPI risks mostly skewed to the upside, these expectations are likely to be frustrated at some point”, Budkiewicz added, expecting rates to stay on hold in 2013.