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South Africa's SARB is a robust anchor but may face more acute challenges

The biggest hurdle in front of SARB is lower forex reserve which is just over USD40bn only and ZAR weakness.

  • The weakening of the National Treasury leaves the SARB to lower its interest rates.
     
  • In general Central bank cannot really prevent currency depreciation but can try to moderate the effects of a weak ZAR on inflation this only reason SARB hiked its policy rate in both 2014 and 2015.
     
  • The downside pressure on the ZAR clearly increases the pressure on the SARB to tighten further.
     
  • ZAR extends losses against dollar to 1.7 percent, reaches new record low of 16.1300 on Thursday during European hours.
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