USD/ZAR likely to trade around 14.40 by end-2018 – Lloyds Bank

The South African rand, over the past month, has been the worst-performing currency, noted Lloyds Bank in a research report. The USD/ZAR pair rose to above 14.50 recently from below 13.50 on rising concerns that imprudent fiscal policy would lead South Africa to lose investment grade credit status.

The rating agency Moody’s recently maintained its rating at Baa3, which is one notch above junk, whereas S&P lowered its rating for the country by one notch to BB+ and placed it on a stable outlook. However, the South African rand is expected to remain highly sensitive and prone to sizeable swings in both directions on investor risk sentiment, stated Lloyds Bank. Political and policy risk continues to be high and is not expected to wane considerably until the South African general election in 2019 at the earliers.

“We forecast USD/ZAR to 14.40 at end 2018”, added Lloyds Bank.

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