The South African rand has made a very impressive recovery from above 16/USD in early May. However, economists at ING expect the USD/ZAR to remain close to the 16 over the next couple of months.

Doubts about the longevity of the recovery in the rand

“We still have our doubts about the longevity of this recovery in the rand. We would still much more prefer the Mexican peso in the emerging market high yield space.”

“For today, look out for the South African 1Q22 current account release. This is expected at a 1.5% of GDP surplus. Commodity price gains have certainly improved South Africa's external position, but with US real rates set to go higher this summer, we suspect USD/ZAR will likely end up closer to 16 than 15 over the next one to two months.”