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Morning NOTE

23 September 2022


The traded in a wide range from 17.7900 to 17.4400 before and post the SARB MPC rate decision.


  • The Rand fluctuated in a wide range, before settling at 17.6000 after the SARB announced another 75 bps rate hike to combat inflation.

    • The SA Reserve bank, maintaining its hawkish policy stance as inflation remains above the Bank’s 3-6% policy band.
      • The Governor showing  the MPC’s commitment to combat inflation as it remains stubbornly above the bank’s target.
      • Governor Lesetja Kganyago, also mentioned 2 committee members asked for a 100bps hike.
    • This week, we’ve seen the Fed (+75) , SARB(+75) , BOE(+50) , SNB(+75) , Riksbank (+100) all hiking interest rates.
      • The only exception was the Turkish central bank who CUT rates by 100bps.
      • This on the instructions from Erdogan, despite inflation above 80% and the Lira at record lows.
    • Tonight Jerome Powell once again talking and it is hard to see any deviation from the policy announcement.
      • The Fed will continue on its rate path and asset prices likely to adjust accordingly.
      • On the risk side the US 10YT spiked to 3.70%, the highest since Feb 2011.
      • The markets bracing for more aggressive FED hikes.

Significant Market Data




  • The ZAR continues to weaken even after the SARB 75 bps hike.
    • This morning we opening at 7.6200 , but have already  weakened 10 cents to 17.7200 as yields continue to rise and stock markets trade lower.
  • The effect of a stronger Dollar and the continued spike in US yields weighing on the Local unit.
    • In addition, the week long stage 5 power cuts have analysts debating about the impact on SA’s economy and if the SARB / Country can really afford continued rate hikes.
    • This would place the ZAR at the mercy of FED hikes and this unfortunately means the ZAR likely to continue on the current path, until the Fed stops.
  • On Thursday, the SARB hiked rates again increasing the repo to 6.75% and the Prime overdraft 9.75% .
  • Trade :  BUY USDZAR

Expected Ranges

  • USDZAR :  Expect a range 17.4600-17.7200
    • Importers 17.5400-17.4600
    • Exporters 17.6500-17.7200
  • EURZAR :  Expect a range of 17.1500-17.5100
    • Importers 17.2500-17.1500
    • Exporters 17.3500-17.5100
  • GBPZAR :  Expect a range of 19.6200-19.9500
    • Importers 19.7500-19.6200
    • Exporters  19.8500-19.9500


  • USDZAR 17.6000
  • EURZAR 17.3100
  • GBPZAR 19.7900


  • Minister of Energy Mineral Resources Gwede Mantashe said he was not responsible for the country’s energy crisis.
    • Mantashe’s comments come on the back of calls for him to be axed after Eskom implemented stage 6 power cuts last week.
      • Mantashe faced criticism over the rampant planned power cuts.
      • Speaking at the signing of power purchase agreements in Centurion on Thursday, Mantashe hit out at critics.
    • Mantashe refused to take the fall for the country’s continued electricity woes. Source : EWN
  • The ANC protected Ramaphosa,  in Parliament after it staved off an attempt by the opposition to debate the Phala Phala farm saga on Thursday – at least for now.
    • The DA submitted its motion last week, calling for the establishment of an ad hoc committee to investigate matters related to the burglary on the president’s farm.
    • But at the eleventh hour, the ANC has now put a stop to the debate.  IOL
  • Not everyone was in lockstep with the SARB’s rate hike decision.
    • Various unions have hit out at the SARB’s decision to hike interest rates, accusing the central bank of choking small businesses.
    • SAFTU spokesperson Trevor Shaku said that he did not believe that the decision was made in the best interests of the economy.
      • “It is regressive and sabotages the economy further in the context of low growth,” Shaku said.
      • Shaku said that higher mortgage costs could drive small and medium businesses to default on payments. News24


  • On Thursday, stocks continued its decline as the major averages extended losses on Thursday, with the Dow losing 0.35%, while the S&P 500 and Nasdaq Composite declined 0.84% and 1.37%, respectively.
  • US stock futures fell on Friday, with the major averages on track to decline for the second straight week as investors worried about the falling odds of a soft economic landing.
    • The Federal Reserve remains intent on bringing down inflation with aggressive interest rate hikes. Futures contracts tied to the three major indexes were all in negative territory.
  • In extended trading, Costco dropped nearly 3% after reporting higher labour and freight costs, while DocuSign and Guidewire rose on positive corporate updates.
    • Consumer discretionary, financials and industrials were hit by recession fears, while defensive stocks outperformed.
  • All three benchmarks are headed for their second straight losing week and are all down at least 2% so far during the period.


  • The US 10-year yield broke above the 3.7% for the first time since February 2011 as expectations of higher interest rates dented appetite for government debt.
    • The FOMC hiked interest rates for a third consecutive meeting on Wednesday while pledging to continue increasing rates as high as 4.6% in 2023 until inflation is under control.
    • Policymakers also significantly cut their outlook for 2022 economic growth, expecting just a 0.2% gain in GDP, down from 1.7% in June.
    • Meantime, the 2-year Treasury yield surged above 4.1%, the highest since 2007, widening the gap in the former and further inverting the yield curve.
  • **NB:  INVERTED yield curves have been reliable indicators of past US recessions.


  • The Dow fell 107 to 30,076
  • The Sp500 fell 31 to 3,757
  • The Nasdaq  fell 153 to 11,066


  • Asian markets lower across the region following another weaker session on Wall Street.

    • In Japan, the Nikkei 225 fell 0.58% to close at 27,154, hitting their lowest levels in over two months and tracking losses on Wall Street.
      • The US Federal Reserve delivered another large interest rate hike and signalled further increases ahead.
        • The BOJ intervening in the FX market to try and stop a rapidly declining YEN, even though it continues to run with its ultra-low monetary policy.
        • Investors also digested the Bank of Japan’s policy decision after it maintained ultra-low interest rates and remained dovish in its outlook.
      • The BOJ defying a global wave of policy tightening and risking further yen depreciation and capital outflows. Reuters
  • The US dollar traded at 111.50  near a 20-year high, underpinned by expectations that the Federal Reserve will remain aggressive in fighting inflation even at the risk of a recession.
    • The Fed raised interest rates by 75 basis points for a 3rd time in a row on Wednesday and projected rates to peak at 4.6% next year with no cuts until 2024.
    • The news defying market speculations that the central bank could ease policy in 2023 to better manage the economy.
    • The dollar also benefited from safe-haven flows amid escalating geopolitical tensions surrounding Ukraine and growing fears about a global economic slowdown.
    • Meanwhile, the dollar weakened against the yen after Japanese authorities intervened in the currency markets for the first time since 1998. FX news
  • Crude oil WTI prices  traded near $83 /bl and were on track for its fourth straight losing week.
    • Demand concerns continue to weigh on prices, as central banks around the world raised interest rates further this week.
    • The US Federal Reserve led the charge with its third straight 75 basis point rate hike and a strong dollar rally driven by the Fed’s aggressive stance against inflation and safe-haven demand also dented sentiment.
    • Meanwhile, oil prices were kept from further losses on Friday following reports that efforts to revive the 2015 Iran nuclear deal have stalled.
    • Investors also monitored Russia’s partial military mobilization that could disrupt supply further, rebounding Chinese demand and the possibility of more output cuts from OPEC+. Gulf Energy News
  • Gold prices continued to fall as it traded near two-year lows around $1,670/oz.
    • Bullion remaining under pressure from a strong dollar and surging Treasury yields that reflected expectations for tighter monetary policy and slowing global growth.
    • The US Federal Reserve led a raft of central bank rate hikes this week, delivering its third straight 75 basis point rate increase to bring down inflation.
    • In the face of concentrated efforts to bring down inflation and major central banks all hiking rates, Gold has lost its shine as the Dollar replaced it as the “safe-haven asset of choice” .  Kitco Metals

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