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USD/ZAR Eyes 200dma as Violence Shows Few Signs of Slowing Down

SOUTH AFRICA
  • USD/ZAR opens lower this morning on the back of selling pressure on the BBDXY, pulling back from 14.80 resistance following an upside surprise in US CPI.
  • USD/ZAR trades +3.27% higher since Monday, fuelled by escalating riot and looting activity in KZN, Gauteng and more recently Mpumalanga and the Northern Cape – in what started as pro-Zuma protests, but morphed into acts of opportunistic criminality amid widespread poverty and unemployment.
  • SANDF deployment has done little to stop the escalation, which is showing no signs of abating as businesses urge Ramaphosa to declare a state of emergency.
  • Transport routes remain closed in the region, with risks of food, water, fuel and medicine shortages rising every day.
  • Positive sentiment surrounding ZAR assets has taken a turn as markets reversed expectations for the situation to just blow over in a matter of days – with many saying violence has been the worst experienced since the 80's and is not expected to be solved overnight due to many complex social dynamics within SA society.
  • Ramaphosa is coming under fire for being too slow to act to stabilise the situation, but may be pressed to enact a state of emergency in the coming days, should he SANDF presence continue to fall short of the mark.
  • Intraday Sup1: 14.5994, Sup2: 14.5024, Res1: 14.7583, Res2: 14.8427 (200dma), Res3: 15.0309
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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