South African Rand: ZAR outperforms on carry and Gold – Societe Generale
Societe Generale strategists highlight that the South African Rand (ZAR) continues to outperform in CEEMEA, gaining about 2.4% versus the US Dollar (USD) in spot terms this month. USD/ZAR is close to breaking below 16.00 for the first time since February.
Societe Generale strategists report that the South African Rand (ZAR) continues to outperform in Central and Eastern Europe, experiencing a 2.4% increase against the US Dollar (USD) in spot terms for this month. The USD/ZAR rate is close to dipping below the 16.00 mark for the first time since February. Gold prices, a dovish Federal Reserve (Fed) stance, and high foreign demand for South African government bonds are aiding the currency's strength.
ZAR's outperformance in CEEMEA is evident, with the rand currently performing +2.7% compared to USD in total returns. Stronger gold prices and a dovish Fed have provided a supportive environment for the risk proxy ZAR. In the first week of August, net ZAR23.1bn was invested in South African government bonds (SAGBs) by foreign investors, marking the strongest weekly inflow since January and highlighting the robust demand for carry.
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