We have noted that for emerging markets as a whole, there seems to be an increased correlation between the performance of local-currency bonds and the exchange rate. This observation also applies of late to South Africa, providing further evidence of the linkages between bond flows and currency trends.
As expected, inflation deviated from the 5% ± 1 pp target range, but the deviation was greater than forecasted. In particular, consumer inflation increased to 8.5% yoy in March. On the one hand, the steeper rise in inflation was driven by temporary factors, such as: growth in global prices for some food products and energy global economic revival effects of last year’s smaller harvests.