Rand forecasts haven’t been this scattered since at least 2006
Donald Trump’s US election victory has caught the world’s most volatile currency in a tug-of-war, with forecasts for the end of next year ranging from a 9% gain to a 14% retreat against the dollar, estimates compiled by Bloomberg show. That’s the widest distribution since at least 2006, when Bloomberg started tracking the data.
Working against the rand are concerns a Trump presidency will force the Federal Reserve to quicken the pace of interest rate increases, eroding the extra returns from riskier emerging market assets. At the same time, Trump’s plan to spend as much as $1 trillion (R14 trillion) on infrastructure has boosted commodities, which are South Africa’s main export earner, and prompted Goldman Sachs to recommend investors bet on higher prices next year.
The most bullish forecast for the rand, which envisages the currency at R13 to the dollar at the end of next year, has a 60% probability, according to options data compiled by Bloomberg. The most bearish prediction from the more than 15 analysts polled is for a level of R16.50.