📝See USD/ZAR Reaching 20.0 On Soft Sentiment: UBS Strategy

South Africa's government policy continues to confuse, so to remedy, President Cyril Ramaphosa will send a mission to G7 members to explain the country's "non-aligned" status. BRICS foreign ministers meet in Cape Town on Friday, which will act as a prelude to the main event in August. The announcement that diplomatic immunity would be granted for leaders attending the conference (including Russia's Vladimir Putin) hasn't helped. Either way, ZAR sentiment remains tepid and it feels like only a matter of time until USDZAR prints at 20.00. Trade data was not as bad as expected but still a lot lower than the same month last year as lower commodity prices and the inefficiency of Transnet and Eskom continue to handicap exports. Forwards are still better bid from internationals, local supply of funding feels decent but tight credit lines across the street are limiting liquidity in the market; demand to cover IMM flows (sell/buy USD) is picking up. - UBS Strategy