Squawk / 11 October 2016 at 13:40 GMT
Managing Director / Balamory
South Africa
The ZAR has been the star Emerging Market currency this year, easily outperforming its EM peers. Hot foreign money, searching for yield and a weak Sterling have all contributed to a stronger ZAR against major fixes.

This party may have ended today as South Africa's political landscape serves a reminder that chasing yield in frontier markets comes with risk.

Depending on the outcome of the battle for control of Treasury between President Zuma and Finance Minister Pravin Gordhan, the ZAR looks set to resume its long term weakening trend. Initial targets would be the R 15.75, R16.75 and a possible blow off to R 19.20

If nothing come of the current status quo, the ZAR could see renewed strengthening pressure if the R 12.50 level is breached.


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