Key points:
• The overvalued USD is correcting lower (DXY down ~5% YTD), driven by a stronger EUR and Trump’s policies that are
accelerating a downturn in the US, and pressuring the Fed to consider cutting rates.
• South Africa’s GNU faces collapse as the DA rejects the ANC’s fiscal framework, threatening legal action and potentially
triggering a cabinet reshuffle. This, combined with Trump’s tariffs, fuels risk-off sentiment, deepening ZAR weakness
despite its REER undervaluation.
• Global markets are reeling from Trump’s 10%+ tariffs, which have spiked the VIX to a yearly high. The ZAR, the worstperforming EM currency this week, faces pressure from domestic instability and a US-led selloff, outpacing all but the
Turkish lira YTD.