Relief for the South African rand
|The South African rand is still under pressure. Economic growth remains sluggish, while inflation continues to overshoot a target of 3-6%. Additionally, a recent attempt to change constitutional law related to land expropriation without compensation, for owners of more than 12’000 hectares, appears tougher than initially thought by the ruling ANC party.
However, the trend appears to be changing now. Recent USD weakness against emerging currencies, along with President Cyril Ramaphosa’s stimulus package, are improving investors’ sentiment. Yesterday’s resignation of Finance Minister Nhlanhla Nene amid corruption affairs related to the Gupta family and the appointment of former Central Bank Governor Tito Mboweni, was welcomed by the market, pushing the rand higher by almost 2% intraday against the greenback. Accordingly, the ZAR continues to benefit from current events, putting waves of uncertainties aside. Currently bouncing from 14.56 (9 October low), USD/ZAR is expected to increase slightly, approaching 14.70 short-term.
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