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Struggling rand may face more near-term pain

The South African rand has weakened sharply against the US dollar so far this year, markedly underperforming other emerging market (EM) currencies. We expect domestic and global headwinds to drive a bit more depreciation, to 19.0/$, later this year. But with the rand’s real effective exchange rate not far from its record low, we think that the stage will be set for the currency to rebound next year.

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