Surprisingly, the South African rand remains firm shrugging off civil unrest in the country. Looking ahead, USD/ZAR is set to stay offered in the coming months, but the 14.00 level provides solid support, in the view of analysts at ING.
Trade surpluses dominate, IMF helps too
“In spite of civil unrest which the SARB says completely offsets the surprise growth gains of 1Q21, the ZAR remains resilient. Driving that strength is commodity price gains which are being realised in the form of monthly trade surpluses in excess of ZAR50 B (USD3.5 B+).
“The IMF’s recent USD650 B top-up in quotas will see USD4.1 B coming South Africa’s way – very useful for a country with relatively low FX reserve coverage ratios.”
“Unlike other EMs, South Africa’s inflation is very well contained and leaves the SARB in no hurry to hike the 3.50% policy rate. USD/ZAR to stay offered over coming months, but 14.00 looks floor.”
