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Before / After Analysis – USDZAR – March 2018 and beyond

On 1 March 2018 we published:

In which we commented:

The South African parliament vote to expropriate white farmers without compensation opens the door to runaway monetary inflation and the demise of the Rand currency. We expect to see the USDZAR correction to have ended here and the ZAR to massively depreciate in the coming months or even years similarly to what happened before in Zimbabwe. This autocratic decision signs the death knell of the SA economy if it is not rapidly reversed and buying the USD (or any robust currency) against the ZAR should be a winning proposition despite the elevated interest paid by the South African currency.
USDZAR Monthly Price Chart – 1 March 2018

Fifteen months later, yesterday, the announcement came down like a sentence:

Domestic growth languished in the first quarter, with the economy shrinking a massive 3.2% – more than double market expectations of 1.5%.

Meanwhile the Rand currency has massively depreciated against the US Dollar and this is probably not the end of the story. The red mark on the updated chart here below shows our March bull signal and the rally from 12 to 15.7 that followed. We are now looking for a trend continuation in the 18 area once 15 is taken out.

USDZAR Monthly Price Chart, 5 June 2019
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