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16 Mar 2020
South Africa: Market expects 25bps cut – TDS
The rate announcement in South Africa is expected on Thursday, analysts at TD Securities brief. The rand, fairly-to-slightly undervalued in the view of the SARB on 16 January, is now 11% weaker vs the US dollar with the USD/ZAR pair at 16.536.
Key quotes
“The market is already priced for a total of three cuts through to September, with a full cut priced in for next Thursday. We don't think the market would react adversely to a 25bps cut.”
“As we are now more aggressively positioned, we cannot exclude some negative rand reaction in case of a 50bps cut.”
“ZAR likely to weaken, in case of 50bps cut as the market expects only 25bps of easing.”