ZAR remains under pressure – Danske Bank

Chief Analyst Allan von Mehren assessed the recent price action around the South African Rand.

Key Quotes

“The ZAR took another beating yesterday as a senior Treasury employee resigned amid plans by President Zuma to introduce free education”.

“The plans would put further pressure on the already stretched fiscal situation in South Africa. It is worth mentioning that the plans have not been released in detail and the Treasury has also signalled that it will respect its fiscal targets”.

“Nevertheless, the uncertainty about the fiscal outlook and possible loss of South Africa’s investment grade rating (Moody’s and S&P are due to give updates later this month), will continue to weigh on ZAR and hence creates upside to our USD/ZAR forecast of 14 by December”.