USD/ZAR set to retrace back to 18.75 – CIBC

ZAR has seen an aggressive year-to-date capitulation at almost 12% against the USD. Economists at CIBC Capital Markets analyze USD/ZAR outlook.

SARB likely to hike further

Last month, the SARB hiked rates to 8.25%, levels not seen since 2009. Watch for a further 25 bps hike in July.

For USD/ZAR, a retracement back to 18.75 would be consistent with long-end spreads easing back to 800 bps from post-crisis levels at 880 bps. Such a scenario will require confidence that the SARB cycle has peaked while ZAR geo-political tensions need to dissipate.

USD/ZAR – Q3 2023: 18.75 | Q4 2023: 18.45