Rand said to hold 2018 gains

The rand is expected to hold onto most of this year’s gains against the dollar, supported by improving domestic economic growth, as long as the US-China tariff tussle doesn’t disturb global trade flows.

A Reuters poll of 30 strategists taken from April 3 to 5 showed the rand is expected to remain mostly resilient against the dollar, around 11.93/$ by end-September, and to slip slightly to 12.13/$ by this time next year.

The currency began the year at 12.40 per dollar.

“What has been driving our rand forecast is that the emerging market fundamental backdrop still looks strong, particularly the interest rate and growth differentials,” said Mike Keenan, strategist at Absa Capital. “That should help the rand sustain this year’s gains.”

But he said getting some clarity on how much further tensions between US President Donald Trump’s White House and China on trade will escalate is the wild card.

A back-and-forth dispute between the US and China over free trade has triggered a market selloff that has marred what is an otherwise brighter economic and political outlook for SA.

SA’s economy grew more than anticipated at the end of last year, with growth expected to rise to 1.6% this year from 1.3% in calendar 2017.

The SA Reserve Bank cut interest rates by a quarter of a percent to 6.5% last month, but will likely keep them there through next year.

“That, coupled with strong equity inflows and an improving domestic growth outlook, underpins our constructive view on the currency,” added Keenan.

SA has been riding a wave of optimism since President Cyril Ramaphosa took office earlier this year, while the country withstood a credit rating downgrade by Moody’s late last month that could have triggered forced bond selling.

Last month’s survey had predicted the rand would weaken more than 4% in 12 months as investors start to take profits from an over-bought currency. – Reuters

Moneyweb

Sars will continue to apply “normal income tax rules” to cryptocurrencies such as Bitcoin and has urged taxpayers to declare cryptocurrency gains or losses as part of their taxable income.

Sars stated yesterday that the existing tax framework could be used to guide taxpayers on the tax implications of cryptocurrencies and that it’s unnecessary to issue a separate Interpretation Note at this point.

“Taxpayers who are uncertain about specific transactions involving cryptocurrencies may seek guidance from Sars through channels such as Binding Private Rulings [depending on the nature of the transaction].”

The emerging market fundamental backdrop still looks strong

Mike Keenan Strategist at Absa Capital