Back
10 Dec 2015
USDZAR ballistic after sacking of Nene with more political uncertainty insight - TDS
FXStreet (Delhi) – Research Team at TDS, notes that the USDZAR shot higher yesterday following the sacking of South Africa’s Finance Minister Nene and his replacement with a relative unknown, David Van Rooyen and interest rates have jumped higher today.
Key Quotes
“Nene was well-respected by the markets, but his attempts to curb expenditure and avoid a downgrade to junk brought him into conflict with President Zuma and other government colleagues. However, Van Rooyen looks like someone who has been appointed to do Zuma’s bidding, which consequently increases the risks of larger fiscal deficits and a downgrade to junk.”
“With the spectre of rising political uncertainty stacking on top of the other problems that have been well known for a long time by the market, there is the risk that ZAR may in fact depreciate well beyond our end-2016 forecast of 16 in a shorter period of time.”
Key Quotes
“Nene was well-respected by the markets, but his attempts to curb expenditure and avoid a downgrade to junk brought him into conflict with President Zuma and other government colleagues. However, Van Rooyen looks like someone who has been appointed to do Zuma’s bidding, which consequently increases the risks of larger fiscal deficits and a downgrade to junk.”
“With the spectre of rising political uncertainty stacking on top of the other problems that have been well known for a long time by the market, there is the risk that ZAR may in fact depreciate well beyond our end-2016 forecast of 16 in a shorter period of time.”