FX Monthly Chart Book
- The detection of the Omicron variant late last year saw the rand fall to its weakest level in more than a year. The rand weakened to R16.26/$ early in December. Despite fragile global risk appetite, elevated global inflation and expectations of rate increases and weaker economic growth due to Omicron, the rand gained ground in the final days of the year, albeit marginally. The rand was up 0.2% against the dollar in December, down 0.2% against the euro and 1.5% against the pound. The rand traded in a range of R15.51/$ to R16.26/$ in December.
- For the year as a whole, the rand was down 7.8% against the dollar in 2021, 0.9% against the euro and 6.8% against the pound.
- The global economic backdrop should remain relatively rand supportive with the ongoing global search for yield, still reasonably strong forecast growth, still relatively easy financing conditions and possible dollar weakness. However, the tailwinds for the SA currency and economy are generally weaker than last year and a fair amount of currency volatility is still expected given the still uncertain Covid developments and the withdrawal of stimulus by major central banks.
- We expect the rand to end the year at R15.00/$ and R15.15/$ by the end of 2023. It is expected to average R15.25/$ and R15.08/$. We are more bullish than consensus (at R16.00/$ and R16.27/$ for end-2022 and end-2023 respectively).