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South Africa: Buy USD/ZAR
Wed, Dec 5 2007, 12:16 GMT
by Stanislava Pravdova, Lars Christensen
We recommend buying USD/ZAR as a short-term speculative trade on the back of the re-emergence of global risk aversion as written in the Sell EM risk basket.
- • The rand is extremely sensitive to increased risk aversion and given the recent rise in risk aversion there should be potential for further weakness in this currency.
- • Even though USD/ZAR have move up somewhat over the last couple of days, USD/ZAR is still in the lower end of the range we have seen during most of the year (6.80-7.40).
- • Even though the Reserve Bank of South Africa is expected to hike rates further this is already priced into the market and hence at least in the short run the rand is likely to get little support from higher rates.
- • With the recent rise in JPY (and CHF) volatility the carry/risk on the tradition EM carry trades have been under pressure.
- • The technical picture indicates some resistance around USD/ZAR 6.8576, which if broken opens for a move towards 7.11.
In conclusion, we recommend entering speculative positions in USD/ZAR spot for a move back into the old range with a target of 7.10.
Published on Wed, Dec 5 2007, 12:20 GMT
Archive
- CEE: Buy EUR/PLN
Published On Wed, Sep 10 2008, 15:04 GMT - EMEA: Buy EUR/TRY
Published On Wed, Jul 2 2008, 10:40 GMT - CEE/CIS: We are still long PLN/CZK, but more cautiously
Published On Wed, Apr 23 2008, 13:08 GMT - CEE: Buy PLN/CZK
Published On Mon, Apr 14 2008, 13:00 GMT - CEE: Buy CHF/HUF, buy CHF/RON
Published On Wed, Mar 19 2008, 14:43 GMT
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