Rand hit thre­a­tens fu­el pri­ce - AA

George Herald - Auto Dealer - - News -

Sub­stan­ti­al rand we­ak­ness could un­do re­cent fu­el pri­ce sta­bi­li­ty, ac­cor­ding to the Au­to­mo­bi­le As­so­ci­a­ti­on (AA), which was com­menting on the u­nau­di­ted midAu­gust fu­el pri­ce da­ta re­le­a­sed by the Central E­ner­gy Fund (CEF).

“Al­most two mont­hs of mo­de­st­ly im­pro­ving rand strength en­ded in a dra­ma­tic re­ver­sal as the lo­cal cur­ren­cy was caug­ht up in the e­mer­ging mar­ket cha­os trig­ge­red by Tur­key’s e­co­no­mic dif­fi­cul­ties,” the AA says. “Until the cri­sis hit, the fu­el pri­ce pic­tu­re for Au­gust had been flat, with da­ta pre­dicting mo­dest de­cli­nes in all fu­el ty­pes at mon­thend, thanks to re­a­so­na­ble sta­bi­li­ty in the rand and in­ter­na­ti­o­nal oil pri­ces.”

Da­ta at mid-Au­gust sug­ge­sted a fall in pe­trol of a­round two cents, with four-cent and eig­ht-cent drops pre­dicted for die­sel and pa­raf­fin re­specti­ve­ly. Ho­we­ver, the dai­ly ex­chan­ge ra­te for the rand fell ne­ar­ly 9% a­gainst the US dol­lar in two days af­ter the news of Tur­key’s trou­bles bro­ke.

T­his has tip­ped pe­trol to­wards a li­ke­ly in­cre­a­se at month-end, and sub­stan­ti­al­ly off­set the gains ma­de by die­sel and pa­raf­fin.

The AA says the fu­el pri­ce tra­jec­to­ry to­wards the end of Au­gust would de­pend on fac­tors lar­ge­ly beyond South A­fri­ca’s con­t­rol.

“Tur­key is re­sis­ting tig­h­ter fis­cal po­li­cy and an end to the stand­off with the U­ni­ted Sta­tes o­ver the de­ten­ti­on of one of the lat­ter coun­try’s ci­ti­zens,” the as­so­ci­a­ti­on com­ments.

“The ten­den­cy of in­ves­tors to re­gard e­mer­ging mar­kets as a sin­gle bas­ket me­ans that furt­her ne­ga­ti­ve news out of Istan­bul is li­ke­ly to be bad for the rand and South A­fri­ca’s fu­el u­sers too.”

The AA says mo­to­ris­ts should not count on the mo­de­ra­te t­rend of the past six weeks con­tinuing and ad­vi­ses them to e­co­no­mi­se w­he­re pos­si­ble.

“The ex­tent and du­ra­ti­on of the re­cent cur­ren­cy we­ak­ness will be pi­vo­tal in South A­fri­ca’s short-term fu­el pri­ce out­look,” the as­so­ci­a­ti­on says.

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