Nigeria naira rebound, SA election and late rate cuts

The naira’s surprising recent recovery appears to have been driven by FX reserve sales and the currency risks becoming overvalued again. We think renewed naira weakness is on the cards over the rest of the year. Elsewhere, in South Africa, the post-election scenario of a coalition between the ANC and leftwing parties like MK and/or the EFF is driving growing concerns about the outlook for the economy and financial markets. Whatever the outcome though, political fragmentation in the country seems here to stay. In the meantime, political concerns, coming alongside the recent March CPI release, reinforce the case that monetary easing is some way off.