Due to the gloomy investment outlook, the South African rand declines.

The South African rand fell in early trade on Wednesday, As a result of investors’ warnings that, despite modest growth in the first quarter, the prognosis for Africa’s largest industrialized economy remained dismal.

“The short-term strength stems from severely oversold conditions, which have been supported by some softening in the US dollar and a slight increase in key export commodity prices,” writes Shaun Murison, senior market analyst at IG.

However, Rand Merchant Bank analysts stated in a research study that rand appreciation had peaked. “There are some noteworthy (South African) positives to mention,” they wrote.

The rand plunged 7% in May; As a result of unprecedented power outages and American claims that South Africa provided arms to Russia the previous year. As a result, the rand plunged as low as 19.9075 per dollar last week, fueling worries that it may break through the 20-level.

According to, Andre Botha, senior trader at TreasuryONE, “the rand was disproportionately undervalued against its (emerging market) peers and, a little rebalancing was warranted.” Compared to other EM currencies, “the rand has retreated more against the US dollar.”

In the first quarter, the country’s GDP rose by 0.4%, averting a recession.

However, given that persistent blackouts don’t appear to be getting any better, investors’ prognosis is still dismal. A Wednesday poll found that business confidence was at its lowest point in three years.

Investors’ focus will shift to the South African Reserve Bank on Thursday when it releases the continent’s first-quarter current account numbers (ZACACT=ECI), which may provide insight into the health of the continent’s most developed economy.

The benchmark 2030 government bond for South Africa traded worse in the opening trades, with a yield increase of 1.5 basis points to 10.980%.

USD/ZAR Long (Buy)
Enter At: 19.175161
T.P_1: 19.917124
T.P_2: 20.028029
T.P_3: 20.977660
T.P_4: 21.790639
T.P_5: 22.433555
T.P_6: 23.237080
T.P_7: 24.096777
T.P_8: 25.164550
T.P_9: 25.868886
T.P_10: 26.768872
T.P_11: 27.355819
T.P_12: 28.456325
S.L: 16.595120


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