Turbulent year for rand

IT HAS been a turbulent year so far for the rand, rapidly transforming from one of the best performing currencies to one of the worst all in the space of six months.

The rand began 2018 flexing its muscles, climbing steadily from strength to strength throughout the first quarter as markets cheered positive developments in the local political environment.

Following his widely celebrated victory at the November ANC National Elective Conference (NEC), Cyril Ramaphosa replaced Jacob Zuma as the country’s president, and reaffirmed his commitment to implementing pro-growth economic policies and rooting out corruption. Subsequent changes to the state cabinet, as well as to the boards at State Owned Enterprises were also well-received, giving proof to government’s vow to put the country back onto a firmer economic footing.

South Africa escaped further credit ratings downgrades, business and consumer confidence soared and inflation reached its lowest levels since September 2015. These waves of Ramaphoria were not to last, however, as turmoil in the global geopolitical arena soon began to send shockwaves through emerging markets. The US Federal Reserve began hiking interest rates in March, while threats of a trade war between the US and China, as well as political instability in the Eurozone led global investors to start moving assets into traditional safe havens, causing massive outflows from among emerging markets.