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USD/ZAR Flirts With 14.50 as Early Signs of De-Escalation Emerge in Looting, Violence

SOUTH AFRICA
  • USD/ZAR trades mostly flat around the open, holding a fraction below 14.50.
  • ZAR assets saw some reprieve in yesterday's session as selling pressure on the BBDXY offset continued violence and looting across Gauteng and KZN.
  • Today, however, we're seeing less reports of looting and violence overnight with 25k SANDF troops hitting the ground this morning.
  • While this is a positive de-escalation, its too soon to call it all over with a number of offshoot issues cropping up, such as racial tensions over vigilantism, which could spark additional unrest.
  • Investigations into 12 key instigators of the violence will be closely eyed in the coming days, but remain somewhat speculative at this juncture.
  • The after-effects of the looting are now being felt in Gauteng and KZN with shortages of food, medicine and fuel precipitating sharp increases in prices and societal discomfort.
  • Whether this translates into material upside pressure in inflation sufficient to shift the SARB's reaction function is yet to be seen, but BNP has noted risks to a September hike.
  • SANDF progress today will be critical for mending ZAR sentiment, which has been dented by the unrest.
  • Intraday Sup1: 14.4098, Sup2: 14.2879, Res1: 14.5753, Res2: 14.6742
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com
BulletEM BulletEmerging Market NewsHomepage
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com
BulletEM BulletEmerging Market NewsHomepage

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