USD/ZAR likely to trade around 14.20 by end-2017, says Lloyds Bank

The South African rand has been the most volatile emerging market currency pair in the last month as political risk continues to be high in South Africa. The USD/ZAR currency pair has moved between a wide range of 13.30 and 13.70, noted Lloyds Bank. After Pravin Gordham was dismissed as the nation’s Finance Minister by President Jacob Zuma, there have been calls by in the National Assembly for a vote of no confidence in the President.

However, a debate on the no confidence motion has been delayed by a request to the Supreme Court to rule on a motion to hold the ballot in secret, stated Lloyds Bank. According to opposition parties, such a move might raise the possibility that Zuma might be removed from office. South Africa continues to face a period of increased policy uncertainty. Along with this, South Africa’s weak economy and sub-investment credit rating implies additional weakness in the rand.

“We forecast USD/ZAR to end the year at 14.20”, added Lloyds Bank.