The improvement in South Africa’s economic fundamentals over the course of the last month means we now expect a continuation in the ZAR rally over the 12-month horizon, as opposed to our previous view of mean reversion. While a third wave poses risks to our view of a ZAR rally in the short-term, foreign investors proclivity to look through covid risks in the EM space at present is notable. With South Africa’s carry characteristics remaining robust and global economic tailwinds still in play, we expect USDZAR to continue trading at the current 13.5 levels this month before driving down to levels not seen since January 2019 over the one-year horizon.
Read our latest ZAR Outlook in full here:
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