While South Africa has seen its currency strengthen to R11.51/USD, R14.18/EUR and R16.09/GBP this year on market euphoria ensuing from the recent political transition (culminating in Cyril Ramaphosa becoming President of SA), subsequently the rand has weakened significantly. The rand remains, as ever, volatile, with the developing US-led trade war, concerns over geo-political conflict (as the US threatens military strikes in Syria), and increases in market expectations of US rate hikes most recently afflicting the currency. We have reweighted the probabilities of South Africa’s scenarios since Q4.17 (see figure 3) to reflect a marked tilt away from the downside, driven by the decreased likelihood of additional credit rating downgrades and fiscal deterioration in SA.

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