USD/ZAR could grind lower near term – Danske Bank
|Chief Analyst at Danske Bank Christin Tuxen believes the ZAR could appreciate further in the very near term.
Key Quotes
“In South Africa, there will be a secret ballot on a motion of no-confidence in president Zuma in the national assembly today (the discussion will start at 2pm). The vote was announced by the National Assembly speaker yesterday after calls from the opposition over a series of corruption claims against president Zuma”.
“The no-confidence motion requires the backing of a majority of the 400 lawmakers to pass. The fact that the ballot is secret increases the chance that ordinary ANC members will vote against president”.
“The rand strengthened by almost 1% against the USD to 13.25 yesterday on the news. If the motion passes in parliament, we may see a break below 13 for USD/ZAR as president Zuma is increasingly seen as undermining the economic and political prospects of South Africa. If the vote does not pass, the upward reaction in the cross may be more muted as the market thinks that president Zuma’s days are numbered given that, now aged 75, he is due to step down as leader of the ANC party in December and as president in 2019”.
“Our end-September forecast for the USD/ZAR rests on him staying in power and hence if the no-confidence vote should pass, this creates significant downside to our projection”.
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