The South African rand has done much better over the last month than analysts at ING expected. But now, they think that ZAR is set to move back lower.

ZAR remains a very high beta currency

“The scope for a stronger dollar into year-end and further growth challenges in Europe (and maybe China too) makes up sceptical of chasing ZAR higher.”

“Last month the SARB sped up the pace of hikes to 75 bps – taking the policy rate to 5.50%. That is still below headline inflation above 7% and does not offer too much protection to the ZAR. The projected 2% of GDP current account surplus is not large.”

“ZAR remains a very high beta currency and unless one expects current benign conditions to stay all year, ZAR should turn lower.”