Phil Mnisi: Speech - meeting with Eswatini ambassadors

What the desk is arguing

The desk frames this as a positive signal for the Emaswati Lilangeni, suggesting that the Central Bank's focus on stability may support the currency against potential external shocks. Governor Mnisi's remarks about economic resilience indicate a proactive stance in managing both domestic and international economic pressures.

Supporting this view, the Central Bank's inflation target remains within the 3-6% range, with the latest data reflecting a controlled inflation rate of 3.5%. This suggests that the bank's policies are effectively curbing inflationary pressures, which is crucial for maintaining currency stability.

The alternative read would be that external shocks, such as a significant rise in global commodity prices or a sharp depreciation of regional currencies, could challenge this stability, but the current trajectory appears favorable.

Where it sits in our coverage

Our consensus target for the Emaswati Lilangeni is set at 1.075, with a range of 1.04 to 1.12. Notable firm targets include: - jpmorgan: 1.10 (Mar26) - bofa: 1.04 (Mar26) - citi: 1.08 (Mar26)

This view aligns with jpmorgan, which is positioned at the upper end of the consensus range, while bofa holds a contrary stance with a more bearish outlook at the lower end.

How other firms see it

Firms like jpmorgan and citi are aligned with our positive outlook on the Lilangeni, emphasizing stability and controlled inflation. In contrast, bofa presents a more cautious perspective, reflecting concerns about potential external economic pressures.

Additionally, the trajectory of the USD/ZAR exchange rate may provide insights into regional currency movements, as fluctuations in the South African Rand often impact the Lilangeni given their economic ties. Monitoring the South African Reserve Bank's policy decisions will also be critical in this context.

What the calendar says

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