Further downside for ZAR
|As contagion continues in emerging markets, the South African rand is no exception. Depreciating by 16% against the greenback since the beginning of the year, USD/ZAR’s steep rise from last Thursday (7.70% from 09/08/2018) is a big hit for the South African Reserve Bank (SARB), which already faced strong ZAR pressure after decreasing its repo rate by 0.25% in March 2018. The SARB decision to maintain its benchmark interest rate at 6.50% during its next policy meeting on 20 September would be more than welcome for the country. Despite inflation contained within its target band, economic growth remains low while business confidence is on the way to recovery, supported by increasing domestic consumption and manufacturing. We expect the recent ZAR bearish trend to end, as the SARB monetary policy stance is appropriate. Currently trading at 2-year high USD/ZAR is expected to rise further in the short-term, amid global risk-off. Estimated at 14.54, USD/ZAR is heading to 15.
Stay on top of the markets with Swissquote’s News & Analysis
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.