USD-ZAR likely to see further upside in Q2: Standard Chartered

Standard Chartered notes its forecasts as follows:

• We raise our USD-ZAR 2015 forecasts, anticipating further gains over the next three months. 
  
  
• We forecast 12.60 at end-Q2-2015, which is neutral in total-return terms given current spot and forward prices - though we would not be surprised by a temporary spike above this level. 
  
  
• Technicals suggest we may see a near-term test of 13.00. However, we are upbeat on medium-term total returns for the South African rand (ZAR). 
  
  
• We see USD-ZAR back down at 12.40 at end-Q4-2015 before rebounding again to 12.90 at end-Q4-2016. 
  
  
• The fall in H2-2015 reflects a response by the South African Reserve Bank (SARB) to external risk aversion despite slow domestic growth; we expect a 50bps SARB rate hike by July ahead of a 25bps Fed hike in September. 
  
  
• The rise in 2016 of ZAR 0.40 also represents good performance compared to the current forward premium of ZAR 0.80.