USDZAR reverses in a growing channel as news support the growthRemember that you only need three points to paint a CHANNEL. June's bottom was predictable and it is now confirmed that the price will likely continue to hit the dashed SHIFTING POINT OF CONTROL from the technical perspective. I rarely speculate on news in forex markets, but fundamentals are so strong for this pair, that I can not ignore them.
The South African Republic has practiced racist policies. The experienced white farmers are getting their land confiscated without any compensation. This, by itself, would not impact the economy, although it is unjust. The problem is that the land isn't given to black farmers. Instead, it goes to political hacks or stays under the government. Or it goes to the Chinese who grow tobacco instead of food (the Chinese are considered to be black under SAR's laws).
Something similar was tried in a neighboring Zimbabwe two decades ago. After food shortages, a new government returned the soil to experienced farmers, although they still were white.
Then, there are government favors to the companies that employ and are owned by black people. Of course, some companies went further than that and started employing politicians' families in senior positions they have no skills for. The companies need to have black partners to secure contracts. Naturally, it disqualifies many international companies from the competition.
Furthermore, you might have heard of the recent uprising. With unemployment above 30%, the people are fed up with corruption, so it is no surprise. The trigger event was putting president Jacob Zuma in jail for corruption, but he has strong support from the largest South African tribe. His supporters now say, that the anti-corruption laws come from the colonial era and are, therefore, racist.
The riots may or may not lead to heavy disruption of supply chains as major oil companies refused to supply the fuel. The cars run out of it and are blocking the road. It might or might not significantly worse the food supply issues.
I had high hopes for SAR in spite of its racial policies. Now it seems that the country can only get more radical. An economy choosing employes based on race and political family ties is unsustainable and will not be able to compete internationally .
