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On August 30th, Finnish President Alexander Stubb stated on Saturday that he does not believe Russia will attack NATO, "the worlds most powerful military alliance." However, in an interview with the German newspaper Bild, he said NATO should "prepare for the worst to prevent it from happening." Stubb pointed out that Russia has lost more soldiers than it recruited and judged that Russia may mobilize more troops in the fall, although this move would have "domestic political implications." He said Moscow is in an "increasingly complex situation," but emphasized that Russia will not end the conflict due to an economic downturn. He stated, "Never underestimate how much economic hardship the Russians can withstand."On August 30th, Yonhap News Agency reported that US President Trumps financial disclosures revealed he traded shares of e-commerce giant Coupang Inc. twice in June through a fund manager. Meanwhile, tensions between the US and South Korea continue to escalate over South Koreas regulatory handling of the massive data breach at the US-listed e-commerce giant. In July, the US House Judiciary Committee released a temporary staff report accusing the South Korean government of carrying out a "discriminatory attack" against Coupang and all other US companies, stating that Coupang has been a "consistently targeted entity."On August 30, Iraqi Prime Ministers Security Advisor Qassem Araji stated in a recent interview with Al Jazeera that Iraq maintains "good relations" with both Iran and the United States and seeks to act as a "bridge" for communication among all parties to reach an agreement that safeguards the interests of the entire region. He added that Iran has emphasized the necessity of eliminating extremist groups within Iraq.On August 30th, SK Hynix CEO Guo Luzheng stated that the company remains open to further investment in the US semiconductor industry, while predicting that the global memory chip shortage will continue until the end of 2030. "We are always open to more investment, but no decisions have been made yet," Guo Luzheng said. He stated that SK Hynix is searching globally for potential sites that can meet its R&D and testing needs, noting that electricity, water resources, and government incentives are key considerations. Guo Luzheng said, "We are open to any location that can provide sufficient infrastructure and resources." He also expressed hope that the company will bring "more good news" to the US artificial intelligence industry in the future.Iraqi Prime Ministers Security Advisor Qassem Araj: Iraq seeks to become a "bridge" between Iran and the United States.

USD/ZAR Forecast: Rand Depreciates by 6% Following Declaration of State of Emergency

Larissa Barlow

Apr 24, 2022 10:41

National Disaster Declared Following Deadly Kzn Floods 

On April 11th and 12th, the province of KwaZulu-Natal (KZN) received between 200 and 400 millimeters of rain in 24 hours, resulting in the displacement of tens of thousands, billions of rands in damage to infrastructure, residences, and businesses, and a death toll over 500.

 

Due to the gravity of the crisis, the government declared a national state of disaster in order to assist individuals and assist with infrastructure reconstruction. Despite the flooding's limited nature, the floods will have a national impact, as SA's major port in the coastal city of Durban has been negatively affected, resulting in shipping delays.

The Electricity Utility Fights To Keep The Lights On

Eskom, South Africa's sole energy provider, announced on April 8 that load shedding will begin immediately owing to outages at the Kendal, Duvha, Camden, and Kusile power facilities. While several units were restored immediately, it takes time for them to reach full capacity, necessitating the usage of emergency producing reserves.

World Economic Outlook 2022, International Monetary Fund

The IMF revised down global growth earlier this week, citing the Ukraine crisis, persistent inflation, and global tightening monetary policy. Significant economies saw downward adjustments, with the US falling from 4% to 3.7 percent and China falling from 4.8 percent to 4.4 percent. Reduced growth in the US and China implies decreased future demand for goods from exporting nations such as SA, which could result in more economic headwinds. Surprisingly, the IMF maintained SA's growth predictions for 2022 and 2023 at 1.9 percent and 1.4 percent, respectively.

USD/ZAR Technical Support and Resistance Levels

The rand has lost over 7% of its value against the strong dollar during the last four trading days. Prior to the current surge in the USD/ZAR exchange rate, the rand was one of the better performing currencies against the dollar. The dollar is fundamentally sound, having benefited from a safe-haven appeal during the early phases of the Ukraine war but now benefiting from aggressive rate hike predictions for the remainder of 2022.

 

The unraveling of the risk-aligned commodity trade, which is linked to global rate hike cycles, adds to the ZAR's troubles by reducing aggregate demand (money becomes more costly to borrow) and frequently results in a slowdown in GDP.

 

The USD/ZAR pair tested the 15.70 mark and has now retreated significantly from that level, which corresponds to the Jan 28 high. USD/ZAR tends to trade near significant psychological levels (purple lines), making 15.50 the closest level to consider. A closure below 15.50 indicates a regression towards trendline support (established from the Jan 28 high), with secondary support at 15.00.

 

However, the rand is vulnerable to further selling due to the abrupt change in ZAR fundamentals. 15.70 is the next resistance level, whereas 16.00 is the secondary level.

USD/ZAR Daily Chart 

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