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ZAR: Rand Close to Fully Paring Budget-Inspired Losses

ZAR
EM BulletBulletEmerging Market News

Broad greenback weakness has contributed to the pullback in USDZAR from Wednesday’s high, with the pair close to fully reversing yesterday’s budget-inspired losses, while the lack of any imminent threat to the GNU has allowed the local currency to recoup losses. Strength across the commodities space will also be contributing to the rand’s stronger showing, with ZAR-denominated gold prices showing at a new all-time high.

  • Local reports indicate that the postponement was due to primarily to a disagreement on a potential 2pp hike to VAT, suggesting that all parties are generally committed to the fiscal consolidation plan (albeit some aspects of the budget will need to be re-negotiated).
  • Sell-side analysts have largely taken the postponement of the Budget Speech in stride, playing down the potential for any imminent collapse of the GNU. See a summary of views here.
  • Today’s reversal lower for USDZAR turns attention back to the Jan 24 low at 18.3022. Lows last Friday closely matched this level, bolstering it as a key short-term support. Meanwhile, a clear break of the 20- and 50-day EMAs – both of which were pierced yesterday – would instead expose key short-term resistance at 19.2296, the Jan 13 high.
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Broad greenback weakness has contributed to the pullback in USDZAR from Wednesday’s high, with the pair close to fully reversing yesterday’s budget-inspired losses, while the lack of any imminent threat to the GNU has allowed the local currency to recoup losses. Strength across the commodities space will also be contributing to the rand’s stronger showing, with ZAR-denominated gold prices showing at a new all-time high.

  • Local reports indicate that the postponement was due to primarily to a disagreement on a potential 2pp hike to VAT, suggesting that all parties are generally committed to the fiscal consolidation plan (albeit some aspects of the budget will need to be re-negotiated).
  • Sell-side analysts have largely taken the postponement of the Budget Speech in stride, playing down the potential for any imminent collapse of the GNU. See a summary of views here.
  • Today’s reversal lower for USDZAR turns attention back to the Jan 24 low at 18.3022. Lows last Friday closely matched this level, bolstering it as a key short-term support. Meanwhile, a clear break of the 20- and 50-day EMAs – both of which were pierced yesterday – would instead expose key short-term resistance at 19.2296, the Jan 13 high.