Citigroup replaced the Brazilian real with the South African rand in its emerging market arbitrage portfolio, citing election risks and rising gold prices in South America. The strategists, including Dirk Weller, wrote in a report to clients. “We expect a modest risk premium on Brazilian assets before the first round of elections,” they wrote. It is expected that the Federal Reserve's more dovish monetary policy adjustments will support the price of gold, although Iran risks make the upward trend in gold prices even stronger. “The rand performed significantly better than other currencies during the rise in gold prices.” The South African Reserve Bank is expected to raise interest rates further, which will also support the rand exchange rate. Strategists have recently gone long for the South African rand.

Citigroup replaced the Brazilian real with the South African rand in its emerging market arbitrage portfolio, citing election risks and rising gold prices in South America. The strategists, including Dirk Weller, wrote in a report to clients. “We expect a modest risk premium on Brazilian assets before the first round of elections,” they wrote. It is expected that the Federal Reserve's more dovish monetary policy adjustments will support the price of gold, although Iran risks make the upward trend in gold prices even stronger. “The rand performed significantly better than other currencies during the rise in gold prices.” The South African Reserve Bank is expected to raise interest rates further, which will also support the rand exchange rate. Strategists have recently gone long for the South African rand.