Given South Africa's exposure to China, the rand has been hit hard by the US election result and what it will mean for the Chinese economy and world trade next year, ING’s Chris Turner notes.  

USD/ZAR is trading above the one-month 17.75 target

“Unlike some other EM economies, however, South Africa has less of an inflation problem with both headline and core inflation largely within the central bank's target range. This is allowing the South African Reserve Bank to ease interest rates in an orderly manner and the market is expecting another 25bp rate cut today. This would take the policy rate to 7.75%.”

“Were it not for the threat of Trump 2.0, we would be a little bullish on the rand. Relatively high real interest rates in South Africa and some improvements in the domestic economy – better electricity supply is helping business confidence – should be helping the rand.”

“Currently, USD/ZAR is trading above the one-month 17.75 target we outlined in our recent FX Talking publication. But we still have some hope for the rand.”