USD/ZAR gains as focus sets on SARB meeting

The USD/ZAR currency pair edged higher on Tuesday ahead of a policy decision by the South African Reserve Bank, while investors were also eyeing Friday’s report on US PCE inflation that could affect Fed rate cut expectations.

The US core Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve’s preferred inflation measure, is expected to have risen 0.3% month-over-month in February.

In year-on-year terms, the core PCE Price Index probably rose 2.8% in February, or at the same pace as in January. It has been the lowest annual core PCE inflation since March 2021.

Meanwhile, ZAR traders now look to the outcome of the South African Reserve Bank’s March policy meeting tomorrow, especially after the most recent data showed CPI inflation had accelerated to 5.6%, while approaching the upper bound of the SARB’s 3%-6% target range.

The central bank is expected to keep its benchmark interest rate steady at 8.25%.

Currency Pair Performance

As of 11:28 GMT on Tuesday the USD/ZAR currency pair was edging up 0.31% on the day to trade at 18.9384.