South African Rate Rise Seen as Inflation Expectations Surge
- FRA market predicts almost 50 basis points in next year
- Rand slumps as Trump presidency seen fueling price increases
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Investors are betting on a South African rate increase as inflation expectations surge in the wake of a collapse in the rand.
Forward-rate agreements starting in 12 months, used to speculate on policy moves, added 40 basis points since the U.S. election and are now pricing in almost 50 basis points of rate increases. As recently as Nov. 3, the contracts had virtually priced out the prospect of policy tightening.