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USD/ZAR Tests 15.00, Brushing Off Eskom & ANC-EFF Coalition Risks

SOUTH AFRICA
  • USD/ZAR trades -0.31% lower this morning, tracking early selling pressure on the BBDXY. The cross fell -1.11% on Friday, making a run at 15.00 support on firmer global risk conditions.
  • Issues with Eskom compounded over the weekend with the risk of extended load-shedding increasing and its reserve position becoming increasingly precarious.
  • Additionally, pushback from opposition parties against making coalitions with the ANC has pushed it into a position where partnerships with the EFF are increasingly likely, creating scope for more left-leaning policy going forward.
  • The focus will be on the MTBPS this week with Godongwana under pressure to step back from his fiscal consolidation push and implement a permanent basic income grant.
  • This is something he has pushed back against since taking office and holds major risks to SA's fiscal position, given its reliance on the volatile commodity cycle.
  • Initial positivity regarding the large tax windfall expected (R140-169bn) has been supporting ZAR since Wednesday. 14.8619 stands as a key support, with the 50 & 100dmas below at 14.7827 & 14.6922.
  • Beyond domestic factors, international markets will look to US PPI & CPI data following recent remarks from the Fed on pricing dynamics and market concerns of more permanent inflation.
  • Intraday Sup1: 14.9138, Sup2: 14.8619 , Res1: 15.1089, Res2: 15.2120
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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