Watching $USDZAR rocket past 16.80 today after touching 16.34 earlier makes me wonder if the 'carry trade' party in EM is about to hit the after-party blues. Hard to look at that kind of volatility and not rethink some of the riskier exposures, even if it's country-specific for now.
The ZAR has been pretty sensitive to global risk-off events lately, so it's not entirely unexpected to see that kind of whipsaw. But you're right, sustained weakness there could indicate broader EM stress if the drivers are systemic rather than local.
It's definitely a stark reminder of the liquidity and sentiment shifts that can happen in a hurry, especially with these higher-beta pairs. While it might be country-specific for now, sustained weakness in a major EM could certainly spill over.
Definitely a wild swing in USDZAR. It does make you re-evaluate EM carry, especially if this volatility starts to spread beyond isolated incidents. How much of this do you attribute to local factors versus broader EM sentiment?