Load-shedding Absa Strategy research has found that ZAR typically sells off by 0.8c per stage per day and since the start of 2023, frequent load-shedding of stage 4 and above have resulted, in part, in a rapid depreciation of the local currency. All signs are pointing to this being a reality, at least for the next 12-24 months, and as a result currently, analysts are of the view that the ZAR continues to trade close to or above R18.00 to the USD. During winter times, South Africa’s energy requirements are also roughly 20% more than in summer times. This could contribute to more frequent/ higher stages of load-shedding during colder months, which would keep the currency under pressure. South African political landscape General elections in South Africa in 2024 are bound to add to volatility in the ZAR as political uncertainty filters through to currency markets. A drop below 50% for the ruling party in 2024, would require governing through coalitions. This could further add to limbo in policy decisions and implementation and affect the currency negatively over the medium term. Greylisting In the third week of February, South Africa was greylisted by the global anti-money laundering watchdog. This puts South Africa in the company of countries such as Mozambique, Syria, and Yemen. The impact of greylisting is that South Africans and South African companies will face higher due diligence when transacting with parties abroad, which implies a higher cost associated with international transactions. Analyst views vary on the impact of this on the local currency. Some note that this has already been priced into currency levels, whilst others are of the view that this could add additional pressure on the ZAR over the months to come.
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