Marc Chandler, global head of FX strategy at Brown Brothers Harriman, sees potential in the long dollar/short rand play. At year-end, the USD/ZAR pair was trading around 9.36. Chandler thinks the cross could return to the 11.00 level in the first half of 2009.
“People seem reluctant to invest in high flying currency markets,” Chandler says. “South Africa is the poster child for high risk in emerging markets, and countries that are most prone to crises will be avoided.”
Chandler says the expected contraction in the global economy in 2009 would keep commodity prices under pressure, which will also weigh bearishly on the South African economy.
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