USD/ZAR targets 15.00 as South Africa’s developments take a back seat – Credit Suisse

USD/ZAR looks set to continue to stabilise in the short-run as the rand’s sensitivity to swings in yields on US Treasuries declines, and as local developments continue to take a back seat. Economists at Credit Suisse raise the short-term USD/ZAR target to 15.00 (from 14.60 previously). A break below 14.40 (the year-to-date low) or above 15.60 (the year-to-date high) will require a major change in the global picture.

Key quotes

“We think USD/ZAR will continue to range-trade in the short run, as the rand’s sensitivity to moves in US rates seems to be declining. We raise our short-term target for USD/ZAR slightly to 15.00 from 14.60 as we think external factors point in that direction while domestic developments will affect USD/ZAR less than international developments.”

“A meaningful break in USD/ZAR below its 24 February low (14.39-14.40) will require a clear improvement in the global risk sentiment – one that involves for example a return in the Nasdaq100 index to the all-time high it hit in February. Although such a USD/ZAR scenario is possible, we refrain from including it in our base case scenario, in part because of our generally USD – positive view.” 

“USD/ZAR failed to break substantially above the 15.60 area in the two episodes since the start of the year when US real rates pushed higher in a major way – in the second week of January and in the second week of March. All-else being equal, we suspect that a return to that level will, at least initially, raise investors’ appetite to sell USD/ZAR.”


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