Is South Africa’s President Jacob Zuma about to be ousted?
Markets think so, judging from the rapid appreciation of the ZAR, which is pricing in improved stability and decreased corruption. A smooth transition will press USD/ZAR down further.
The positive scenario is that Zuma will resign in the next few months, and Cyril Ramaphosa will succeed him without massive turbulence or the ruling African National Congress party breaking through self-destructing factions. Despite the minor correction in high-beta emerging market currencies, we remain bullish on the Rand.