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Strength in the rand against the U.S. dollar has been supported by the decision from ratings agencies, Fitch and Moody’s to hold their investment grade ratings on South Africa’s local currency credit. Markets will be eagerly watching the S&P ratings agency review on SA, scheduled for release on Friday the 2nd of December. Should the company decide to keep the country’s sovereign rating above sub investment (or junk) it is likely that rand strength will continue. If we consider the Fitch and Moody’s reluctance to lower their respective investment grade ratings on South Africa, it does appear to improve the probability that S&P also extend the “grace” period for SA.
Traders who have managed to catch the short USD/ZAR move might consider moving their stop level to R14.01, in the event of a close above this level.
R13.40/$ remains the initial target favoured, a break of which further favours a move to R13.19/$.