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USD/ZAR Pulls Back from 14.50 as Traders Take Profits; Key Political Developments Eyed

SOUTH AFRICA
  • USD/ZAR trades -0.07% lower this morning, mirroring price action in the BBDXY with risk sentiment picking up slightly in the European equity session.
  • The cross pulled back from 14.50 yesterday in early signs of profit-taking on the extended ZAR gains post-SARB. SA’s terms of trade have moderated sharply (-30.68%) since 7 March to return to Nov 2021 levels and are likely to weigh on ZAR slightly going forward.
  • A number of key political developments came through yesterday/overnight with analysts forecasting a Ramaphsoa ANC victory in the party’s December elective conference, Magashule’s court bid being dismissed and FinMin Godongwana seeking to restructure the method for determining public sector wages ahead of negotiations.
  • Magahsule’s loss dramatically weakens the prospects for the RET faction going into December, unless he can be acquitted of all corruption charges.
  • The FinMin looking to restructure public sector wage mechanisms is also a fiscal positive after years of handing out above-inflation wage increases, govt is taking back power from the unions, which is key to labour sector reform and unlocking growth potential.
  • USD/ZAR will be responsive to global risk sentiment today with Ukraine ceasefire talks happening in Turkey, although both sides have downplayed hopes of progress in the lead-up.
  • Intraday Sup1: 14.6128, Sup2: 14.5794, Res1: 14.7368, Res2: 14.7820
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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