USD/ZAR to edge lower towards 14.00 over coming months – ING
|Early August proved a rocky period for the ZAR, hit by both a cabinet reshuffle and a mini-crash in commodities on China slowdown fears. The rand’s recovery has been impressive though – economists at ING expect the USD/ZAR pair to drop towards the 14.00 level.
See: USD/ZAR to sink to 13.80 on a break below 14.10 – SocGen
ZAR survives cabinet reshuffle
“The rand’s recovery has been spectacular though – the new Finance Minister greeted well and commodities bouncing back. With the external environment slightly positive, USD/ZAR could make a run to the 14.00/14.25 area over coming months.”
“Yet domestic growth is weak and the SARB is certainly in no hurry to hike rates. A 3.50% policy rate is quite low relative to South Africa’s credit bucket and looks unlikely to be raised soon.”
“We would expect the ZAR to struggle a lot more in 2022, when the broad dollar trend turns and rising US yields pressure test EM.”
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