“Exotic” to watch: South African rand

FXCM’s Lee says the South African rand (ZAR) is a currency to watch near-term.

“Given the recent attention on carry trades and interest rates, I still think that the ZAR has some potential,” he says. ”Technically, however, I might be waiting a bit for a better price, as we’re approaching a major support level (in late July).

” The South African Reserve Bank hiked interest rates in early June from 9.0 percent to the current 9.5 percent. Bullish interest-rate differentials alone favor the rand vs. the U.S. dollar’s 5.25 percent fed funds rate.

Looking at the differential, Lee says it’s still a good percentage to play.