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Rand Outperforms EMEA Peers, Though USD/ZAR Still Above Yesterday’s Lows

ZAR
  • While downside momentum in USDZAR has accelerated moderately in recent trade, ranges still remain contained within yesterday’s extremes. A clear and sustained break of both 18.5578, the Feb 2 low, and 18.5501, Tuesday’s low, would threaten the overall technical bullish theme and could open 18.2550, the Dec 29 low.
  • Outperformance of the rand last week was attributable to the substantial rally in gold, prompting USDZAR to break below the 50-, 100- and 200-DMAs. This week, the yellow metal has traded on more stable footing, while the rand’s spot gains against the greenback (+0.38%) have exceeded that of all of its other major EMEA peers.
  • ZAR has exhibited resilience to the slight downtick across the major China equity indices today, though broader positive sentiment surrounding Chinese equities has improved in recent weeks given firmer policymaker rhetoric and action.
  • Domestically, SARB Governor Lesetja Kganyago expressed confidence that South Africa could be taken off FATF grey list by 2025, "given the fixes we are implementing." Kganyago also noted that interest rates need to stay "higher for longer" in order to stabilise inflation.

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