SARB’s credible monetary policy likely to support ZAR slightly and prevent it from crashing, says Commerzbank

The South African Reserve Bank’s (SARB) credible monetary policy is expected to support ZAR slightly and prevent it from crashing, according to the latest research report from Commerzbank; President Jacob Zuma has announced his resignation after the pressure simply became too much.

His party, the ANC, had announced yesterday that he was going to be pushed from office with a vote of no confidence in parliament scheduled for tomorrow after Zuma had not responded to its demands for resignation. It would seem that the current deputy President and ANC leader Cyril Ramaphosa will be sworn in on Friday.

The (preliminary) end of the political thriller in South Africa turned ZAR into one of the major winners against the flagging USD yesterday. At the same time, this could spell the end of the spectacular ZAR rally seen over the past months. As now Zuma’s successor will have to deliver and confirm the hopes the market has placed in him, something that will be difficult in view of the weak fundamental framework conditions (horrendous growth, high unemployment, disastrous infrastructure).

"We do not believe that Ramaphosa will be able to simply pull solutions to these challenges from a hat like a rabbit and therefore assume that ZAR will depreciate initially," the report added.

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