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Credit Suisse Lowers USD/ZAR Target to 14.60

SOUTH AFRICA

Credit Suisse on USD/ZAR:

  • Lowers target from 14.90 to 14.60
  • Overall global backdrop remains conducive for ZAR strength, despite rising US real yields
  • While our slight target revision is mostly based on global factors, local factors have also moved in a ZAR-positive direction in the last couple of weeks
  • Positives: decline in new Covid-19 infections, rally in precious metals
  • Risks: ZAR vulnerability to rising U.S. real rates or dip in global risk-sentiment
  • Budget presentation on Feb 24 also poses risk as it may move the currency strongly in either direction if Treasury revises macro projections
  • Rally in metal prices is encouraging, but this alone cannot take USDZAR substantially lower,
  • given SA's poor track-record of attracting investments into the mining sector in recent years amid regulation on ownership in the sector, and given that oil prices are rising at the same time
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com

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