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USD/ZAR Pares Gains But Remains Afloat, NatWest Flag Bullish Prospects For Currency

ZAR

Spot USD/ZAR remains afloat alongside the BBDXY Index, albeit both have pulled back from session highs. The rate last trades at 18.6879, just above neutral levels. EUR/ZAR is under pressure and trades at 20.1841, close to its worst levels since Jan 2.

  • NatWest have turned bullish ZAR citing (1) a very conservative central bank; (2) reduced electricity rationing; (3) diminished risk of the radical EFF party joining government; (4) the rand switching drivers to the USD from China; (5) cheap current valuation of the rand and attractive returns. They note that the risks to this view include a potential deterioration at Transnet and the upcoming Budget Speech.

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