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On the eleventh and twelfth of April, the territory of KwaZulu-Natal (KZN) got somewhere in the range of 200 and 400 mm of downpour in 24 hours, uprooting many thousands, making billions of rands in harm framework, homes, and organizations, and raising the loss of life to north of 500.

The rand has lost nearly 7% of its value against the strong dollar in the last four trading days. Prior to the recent USD/ZAR spike, the rand was one of the better performing currencies when compared to the dollar. The dollar is fundamentally strong, benefiting from a safe-haven appeal during the early stages of the Ukraine conflict but now benefiting from aggressive rate hike expectations for the remainder of 2022.

The unwinding of the gamble adjusted item exchange, which is connected to worldwide rate climb cycles, decreases total interest (cash is more costly to acquire) and frequently brings about a log jam in development.

USD/ZAR tried the 15.70 level and has since withdrawn fundamentally from that level, which relates to the high of January 28.Because USD/ZAR tends to trade around major psychological levels (purple lines), the nearest level to consider is 15.50. A close below 15.50 indicates a retracement towards trendline support (initiated from the high on January 28), with secondary support all the way at 15.00. 

The radical change in ZAR fundamentals, on the other hand, makes the rand vulnerable to further selling. The next barrier is 15.70, with 16.00 as the secondary level of resistance. 

Because of the gravity of the situation, the government declared a national state of disaster in order to assist citizens and repair critical infrastructure. Despite the localised nature of the flooding, the impact will be felt on a national scale because SA’s largest port, in the coastal city of Durban, has been adversely affected, resulting in shipping delays. 

Eskom, South Africa’s sole energy supplier, announced on April 8th that load shedding would begin immediately due to outages at the Kendal, Duvha, Camden, and Kusile power stations.

• While a number of units were quickly restored, ramping up to full output takes time, necessitating the use of emergency generating reserves. 
• The IMF revised global growth lower earlier this week, citing the Ukraine conflict, persistent inflation, and global tightening monetary policies. Lower revisions were seen in major economies such as the United States, which fell from 4% to 3.7%, and China, which fell from 4.8 percent to 4.4 percent. 
• Lower growth in the United States and China translates into lower future demand for imports from exporting countries such as South Africa, potentially resulting in additional economic headwinds. Surprisingly, the IMF maintained SA’s growth forecasts at 1.9 percent in 2022 and 1.4 percent in 2023.