USD/ZAR: Falling to 16.50 in a risk-on mode – Credit Suisse

Economists at Credit Suisse mark the 16.50-16.55 area as a short-term level which USD/ZAR could fall to if global risk markets continue to rally. By contrast, renewed selloff in EM FX complex would likely take USDZ/AR back to its April range (17.81-19.36).

TDS closed a long USD/ZAR position yesterday as the rand is well-supported

Key quotes

“Despite its aggressive decline so far, USD/ZAR still seems to us likely to fall further if global risk markets remain in a risk-on mode. In terms of risk-on levels we tend to think that a break below recent lows of 17.17-17.18 (from 25 March) will lead investors to eye the 16.50-16.55 area as a short-term target. 

“Following the logic that the rand is likely to remain primarily driven by sentiment in the global EM FX market, we think that a reversal of current investor bullishness in global markets remains the key risk for the rand at this point. We think that a renewed sell-off in the global EM FX complex would take USD/ZAR back to its April range (17.81-19.36).”