This pressure hose connects the SAI (Secondary Air Injection) pump to the control valve on the exhaust manifold.
This part is listed by BMW as BMW part number 11721432867 and is described as Secondary Air Pressure Hose for M52/S52 Engines on Z3 2.8 (1997, 1998) and Z3M Coupe/Roadster (1997, 1998, 1999, 2000).
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BMW Fitments:
Z Series
E36/7 / E36/8 Z3 (96-02) > Z3 2.8 97-98
E36/7 / E36/8 Z3 (96-02) > Z3 M - S52