UBS says the rand continues to reflect a higher risk premium on concerns a left-leaning party could join the GNU. Swiss investment bank UBS says a"very positive outcome" for the rand is now less likely, given the uncertainty that surrounds President Cyril Ramaphosa’s proposed government of national unity .
UBS analyst Tilmann Kolb says the bank is advising investors to wait out the political wrangling and refrain from taking directional exposure to the rand at this point. This as the local currency continues to reflect a higher risk premium, given the possibility that of a left-leaning party such as the EFF or MK Party in the GNU.
"Recent dynamics have made a very positive outcome for the rand less likely, in our view," Kolb wrote in a research note dated 7 June."We think a government that includes the EFF could weigh further on the rand, especially if the DA is not involved. The participation in government of can’t be fully ruled out, either."South Africans need to be in the know if we want to create a prosperous future.
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