Economists at Credit Suisse convert their single-point 14.30 USD/ZAR target into a range of 13.70-14.30 as the rand remains subject to appreciation pressure against the US dollar in a global environment with general dollar weakness.
Shifting to a range view for USD/ZAR
“After operating with a single-point USD/ZAR target of 14.30 since 21 April, we now adopt a target range of 13.70-14.30 as markets exhibit an increasing willingness to sell the USD against a range of currencies as US real rates remain depressed and have been able to sustain a bounce in the face of strong US inflation readings.”
“Despite our decision to allow for the possibility of a fall in USD/ZAR by moving to our new range target, we stick to a view that USD/ZAR is close to reaching a bottom after trending downward for many months. We think so because we see falling scope for repatriation flows in South Africa at current USD/ZAR levels, and because we expect moderation in the country’s current account surplus.”
“A large and sustained break below the low-end of our new target range (i.e. 13.70) would probably require fresh rand-bullish drivers or a lasting and prolonged trend of USD weakness.”
“We see scope for limited intraday volatility in USD/ZAR tomorrow in case one or two members vote for a rate hike or in case the central bank will opt to indicate that the currency has become ‘expensive’. Our base case is that any possible intraday move in USD/ZAR tomorrow is unlikely to develop into a trend or to lead to a break outside our new range.”
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.