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I think it's GAME-OVER for the South African Rand in 2022

by , 21 February 2022
I think it's GAME-OVER for the South African Rand in 2022
Since last year, emerging currencies have been falling.

Scrap that… CRASHING…

We aren't sure why exactly, but I think it's all down to what is happening with the US.

You see, the FED is expecting to raise their interest rates this year.

This will help dampen the inflation rate.

As this is good for the GDP and the economy, it will lead to US dollar strength and weakness among other emerging currencies.

Sounds boring, but have you seen what's happened to emerging currencies in the last year?

I feel like this is unprecedented in my lifetime… Take a look at how some of these currencies have crashed.

Australian dollar: -12% (From 0.80 down to 0.70AUD/USD)
Kiwi dollar: -12.40% (From 0.74 down to 0.65 NZD/USD)
Turkish lira: -33% (From 16.42 to 10.90 USD/TRY)
South African rand: -4% (From R14.70 to R15.30)

I know what you're thinking… Ouch to the others and bravo to the rand!

Among all the emerging currencies, not only did the rand just drop a mere 4%, but it also reached R13.41 to the US dollar at one stage.

That was all until June 2021. Since then, it's been weakening on a gradual trend back to R15.30.

And now, I think it's game over for the USD/ZAR this year.

I'm starting to see deadly signs that are pointing to major US dollar strength this year, which will unfortunately bring down the rand further.

Here's why and what we can do to profit from the falling rand...

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Here’s what I’m talking about…

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Jobs are picking up in America bolstering the dollar

On Friday, the jobs report came out in America.

The Nonfarm Payrolls increased 467,000 in January.

This means 467,000 new jobs were added – despite the Omicron variant still in effect. And it followed the economy creating over 709,000 jobs in November and December.

Even President Joe Biden celebrated the report in a speech in Washington and said “America’s back to work” “History’s been made here”.   

Normally, when you see a positive report come out in the US it normally results in US dollar strength in the next month or so as investors start buying the US dollar.

Eishkom is not good for the rand

While America started off on a strong note, unfortunately on Monday the rand weakened as Eskom announced the continuation of the scheduled power cuts and load shedding.

They said they need to continue the load shedding after there were more breakdowns at its ailing coal-fired power stations. Not only that but, it is getting worse for electricity users.

If Eskom gets permission to raise their prices by 20.50% this year, it could increase the municipal electricity bills by as much as 17.5%.

This will lead to investors exiting their rand positions, due to the uncertainty of the country’s electricity state.

And we will continue to see downside for the rand.

Also, the charts entirely agree with downside to come.

 

This Rising Channel could signal big downside for the rand

 
 
Since June 2021 when the rand reached R13.42 to the US dollar, the US dollar has been climbing slowly pulling the rand down.

During this time, it entered into a consolidation (sideways) pattern called a “Rising Channel” (Shaded area).

This is a pattern where higher low prices and lower high prices are formed which creates a somewhat triangular pattern.

Now that the formation is about to be completed, it means we should start to see buying (of the US dollar against the rand).

And this could lead to the rand weakening once again.

The first price target I expect the USD/ZAR to reach is at the top of the Rising Channel.

In this case, my first price target for the rand is to R16.34 to the US dollar.

(Five commodities that will profit as the rand goes down…
Read more here.)

Here’s how we’ll profit from the falling rand
 
There are two main ways you can profit from the weakening rand.
 
First, I’m going to go long (buy) the USD/ZAR CFDs and hold it until it hits R16.34 to the US dollar.

Second, I’m going to look at buying into the resource and industrial stocks that rise when the rand weakens.
 
You see, a rising US dollar is positive for resource companies. Exporters like BHP Billiton Group, Anglo American, Kumba and Glencore.  As these companies export goods to other countries, it becomes more competitive for other countries when the rand falls.
 
This means, when the rand weakens, resource company’s profits go up which pushes the company’s prices up…
 
If you’re ready to profit from the fall in the rand and the rise in resources in 2022, continue by going
here…



I think it's GAME-OVER for the South African Rand in 2022
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