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The SA Daily 12 September 2019

Rand is valued on par

Shireen Darmalingam

  • The rand has raced into firmer ground over the last two weeks. Though it had touched R15.49/$ by end August, it has since reclaimed 5.5%; and, it has gained 2.1% since January.
  • The rand is at R14.66/$ currently. It is also below its 50-day moving average (R14.68/$). However, it’s still above both the 100-day moving average (R14.56/$) and 200-day moving average (R14.33/$).
  • The rand this week took heart from comments by Moody’s rating agency that SA’s investment grade rating in November will likely be maintained despite the entrenched uncertainty and lack of progress on reforming Eskom. Moody’s currently has SA rated at Baa3 with a stable outlook.  
  • Q2 GDP data last week too supported the rand. GDP growth was 3.1% q/q in Q2:19, from an upwardly revised -3.1% q/q (previously -3.2% q/q) in Q1:19. We forecast GDP growth of 0.5% in 2019, although there are downside risks.
  • The rand, significantly weaker than peers this year, should strengthen further in 2019, likely ending the year at R14,50/$ — should there be no further intensification of the global trade war.

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