Sign in
Research link-chevron Created with Sketch.
link-chevron Created with Sketch. Products and Services link-chevron Created with Sketch.
link-chevron Created with Sketch. Products and Services
Economics link-chevron Created with Sketch.
FX Report
The Loop
Inside China
Insights & Strategy
Equities link-chevron Created with Sketch.
Corporate Commissioned Research
Analysts
Analysts
Help and Support
Help and Support
Corporate and Investment Bank
Standard Bank Group
The SA Daily 08 July 2020

EM currencies off deep lows

  • From R14.00/$ in January, the rand has now retraced off its weakest levels during the sell-off in April – but it is still down 18%. Indeed, most EM currencies are weaker now than they were in January.
  • Nevertheless, the rand right now is just 4% weaker than our year-end forecast of R16.50/$ amid some easing in global financial turmoil as economies re-open. 
  • SA real government bond yields being relatively high, with non-residents having bought R7.6bn of SA bonds in June after aggressive selling, particularly in March, as well as the Q1:20 current account surplus due to SA’s elevated terms of trade too should support the rand, with the bias towards further firming.
  • However, with recurring waves of COVID-19 infections in advanced economies and rising rates of infection in SA and other EM economies such as Brazil, India and Russia, there are risks to the rand, including the very poor fiscus. The National Treasury forecast now is for a far wider fiscal deficit of 14.6% of GDP and debt of 81.8% of GDP in FY20/21, posing entrenched risks to SA financial assets.  

Read PDF