The South Africa Reserve Bank has taken the unexpected move of hiking rates today at the conclusion of their monthly policy meeting, and the rand is plummeting on the news.
The SARB hiked its benchmark interest rate 50 basis points to 5.50%. Market economists expected rates to be left on hold.
The rate hike comes on the heels of two other unexpected rate hikes by central banks in emerging markets earlier this week. Across EM, markets have been caught in a storm of portfolio outflows as the Federal Reserve begins winding down its quantitative easing program, reducing dollar liquidity in worldwide.
Tuesday, the Reserve Bank of India unexpectedly hiked its benchmark interest rate 25 basis points to 8.00%.
And at the conclusion of an emergency meeting last night in Ankara, the Central Bank of the Republic of Turkey announced massive rate hikes to shore up the plummeting lira, raising its benchmark overnight rate a whopping 425 basis points to 12.00%.
The chart below shows the reaction of the U.S. dollar-South African rand to the SARB action this morning. Right now, USDZAR is up 1.9%, trading at 11.2750.
Business Insider Emails & Alerts
Site highlights each day to your inbox.