USD/ZAR recovering majority of bearish-Zumbar-related gap

USD/ZAR is recovering fro the opening gap from 12.6783 lows, currently trading at 12.7863 having opened at 12.9009.

The rand was under immense pressure back in March when concerns that Jacob Zuma, the South African president, was preparing to fire Pravin Gordhan as finance minister. The price was down circa 12.31 vs the greenback towards the end of March before the rand fell off a cliff to 13.9497, the high made on 9th April, as political uncertainty escalated. 

Usually, the rand is less traded than some of its EM peers such as the Mexican peso or Turkish Lira, it is the 20th most traded currency making up 1% of the world’s daily currency trading, according to a survey by the Bank for International Settlements (BIS). However, the higher liquidity attracts unwanted attention, especially in times of political turmoil is the struggling nation, which can lead to an increase in speculative activity and currency volatility, he explained - when it moves, it moves.

Like back in April, when the rand recovered sharply on clarity when Mr Gordhan told reporters he was still the finance minister after he was asked if he would be sacked, the rand is on the move again on failures of Zumba's ruling party's attempts to have the national executive committee of the African National Congress to order him to step down. 

This trade has been a typical buy the rumour sell the fact trade since March and when the market's got a hold of the possibility that the ANC leadership would be discussing the removal of President Jacob Zuma. The dollar had also been on the back foot earlier this month allowing for appreciation in EM's and currencies. Today, however, the rand has extended its gains in a long squeeze in USD/ZAR which is recovering back the majority of the losses in early thin trade.