Rand’s fu­ture like ‘throw­ing a dart’ R13

The Star Early Edition - - NEWS - Regis Nya­makanga

PRE­DICT­ING the per­for­mance of the South African rand against the ma­jor trad­ing cur­ren­cies over the next five months is akin to “throw­ing a dart”, economists and mar­ket an­a­lysts said yes­ter­day.

There seemed to be no con­sen­sus on the mar­ket with some pre­dict­ing that the rand would fall to as low as R14 to the dol­lar on the back of the grow­ing po­lit­i­cal and eco­nomic un­cer­tainty, while oth­ers saw the lo­cal unit strengthening to trade be­tween R12.50 and R13 against the green­back.

Re­search an­a­lyst at No­mura, Peter At­tard Mon­talto, yes­ter­day pre­dicted the rand to trade at R14 against

The me­dian rand/ dol­lar ex­change rate pre­dic­tion

the dol­lar by year end, ahead of the ANC na­tional con­fer­ence in De­cem­ber, which is ex­pected to elect Pres­i­dent Zuma’s suc­ces­sor.

“We still think that grow­ing po­lit­i­cal noise into a win for Nkosazana Dlamini-Zuma in De­cem­ber, a growth shock at Q2 GDP com­ing out in Septem­ber, stalled con­sol­i­da­tion and higher is­suance in the Oc­to­ber medium-term bud­get pol­icy state­ment and the mar­ket fi­nally see­ing the very real threats to the econ­omy from de­bates around the SARB and land re­form will all come home to roost even­tu­ally,” Mon­talto said.

“For­eign flows into South Africa re­main very sup­port­ive on the bond side, though less so on the eq­uity side. The spike in net for­eigner in­flows around the time of the reshuf­fle meant the mar­ket re­ac­tion was par­tic­u­larly muted and al­lowed the rand ap­pre­ci­a­tion trend to con­tinue shortly af­ter,” he added.

Re­bal­ance Fund Man­agers econ­o­mist Dr Chris Harmse said the rand would trade be­tween R13.80 and R14 ow­ing to higher US in­ter­est rates, pos­si­ble lower SA in­ter­est rates and po­lit­i­cal un­cer­tainty in the lead up to the elec­tive ANC con­fer­ence in De­cem­ber.

Old Mu­tual In­vest­ment Group eco­nomic strate­gist, Rian Le Roux said: “If you look at the short term volatil­ity of the rand, just re­cently trad­ing at be­low R12.50/$ and R13.60/$ within just a few months, fore­cast­ing a num­ber 6 months hence is as good as throw­ing a dart. One might have ven­tured such a pre­dic­tion had the ZAR been clearly over- or un­der­val­ued, but that is not the case presently, as the ZAR seems pretty rea­son­ably val­ued.”

Le Roux said it would ex­pe­ri­ence short term volatil­ity in the next 12 months driven by news, event or data flow. “It is hard to see much of an im­prove­ment be­low R13 in the ab­sence of much bet­ter news flow.”

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