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16 July 2019

Rand holding up well

Shireen Darmalingam

  • H1:19 suffered much political uncertainty before the SA national elections in May. This, and the persistent risk of further power cuts, as well as global headwinds and risks, saw a rand weak and vulnerable. Dollar strength too kept investors at bay in H1.
  • However, after the positive election outcome in May, the rand has been holding up well. The expected political and policy reforms have seen it firming steadily. President Ramaphosa’s State of the Nation Address (SoNA) in June cemented these expectations, further supporting the rand. The SoNA showed credible policy reform in progress, promising to drive GDP growth.
  • Since May, the rand has firmed 3.8%, and 4% on a trade-weighted basis. It is now edging towards our year-end target of R13.80/$; it is also within the R13.30/$ to R14.30/$ fair value range. Our forecasts however are based on the global trade war not worsening.
  • The rand right now is also benefiting from a weaker dollar.
  • Positive China data has eased global growth concerns this week.  

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