Sell first, question later
The jury is still out on whether the initial “sell everything” reaction to a sudden increase in geopolitical risk has concluded. Certainly, some volatility remains which serves as an indication that trading conditions have not calmed whilst markets continue to question how this chapter of US military intervention ends. Emerging markets have faced heavy losses despite many having little to no economic exposure to the affected region.
Take South Africa for example, both the Rand and local government bonds have faced severe losses in recent sessions. Whilst markets were in a de-risk at all costs frame of mind, this rotation made sense. The Rand had become a if not the favourite candidate for the carry trade, a dominant trading theme of 2025 and so far in 2026. As such, traders would have found that there was plenty of value of risk available within such carry trade for traders to sell in an effort to derisk their portfolios and meet possible margin calls.
Prior to last weekend’s military activities, many major banks had downgraded their USDZAR forecasts. Many of those forecasts projected USDZAR below the prevailing spot rate at the time. For example, JP Morgan expected the pair to trade around 15.70 through to year end. With spot having risen some 5% peak-to-trough this week alone, once the dust settles and the questions start being asked, could some of that fire sale be reversed?
Discussion and Analysis by Charles Porter
Related Insights
Daily Brief – Missing haven
Charles Porter
Tue 7 Apr 2026
Missing haven At the start of the year, the Franc had performed well as a safehaven. As a result of political and economic developments in Japan, the Yen was not abiding by its usual safehaven form. Therefore, defensive plays within FX only had two credible places to go: the US Dollar or the Swiss Franc. […]
Daily Brief – Battle of the banks
Charles Porter
Thu 2 Apr 2026
Battle of the banks Market volatility continues amidst unclear messaging from both sides of the conflict in Iran. The President’s position has continued to flit between seemingly concrete positions of absolutely tangible progress and bombing the nation back ‘to the Stone Ages’. Since the start of the war, smarter money has acknowledged that predicting the […]
Daily Brief – Questioning Truth
Charles Porter
Tue 24 Mar 2026
Questioning Truth Adopting the same handle as his now rather redundant X account, @realDonaldTrump shocked markets yesterday using his own social media platform, Truth Social. During Trump 1.0, the legitimacy of a President using an unofficial X, then Twitter, account was questioned. Now under Trump 2.0, it’s seldom questioned when he is the majority shareholder […]
