South Africa\u2019s rand will lose half of the 7 percent gains made against the United States (US) dollar since the start of the year over the next 12 months, pressured by fiscal constraints and weak growth, a Reuters poll found on Wednesday.<\/p>\n
The rand has topped emerging market currencies since the turn of the year, buoyed by external developments such as a potentially more \u201cpatient\u201d Federal Reserve in raising interest rates and a revitalised mood in US-China trade talks.<\/p>\n
However, in 12 months the rand is expected to have weakened over 3 percent to 13.85 per dollar although that median forecast is 58 cents stronger than last month\u2019s.<\/p>\n
\u201cThere are still notable local risks aligned to subdued growth and fiscal challenges that warrant caution,\u201d<\/em> said Christopher Shiells, emerging markets analyst at Informa Global Markets.<\/p><\/blockquote>\n
In October\u2019s budget review, South Africa\u2019s finance minister, Tito Mboweni, predicted wider budget deficits and cut growth forecasts that focused spending on infrastructure, manufacturing and agriculture to boost the weak economy.<\/p>\n
\u201cThese challenges may lead to a sovereign credit rating downgrade from Moody\u2019s in March if the 2019 budget does not allay any lingering concerns,\u201d<\/em> Shiells said.<\/p><\/blockquote>\n
The budget is due to be announced in about two weeks, followed by a Moody\u2019s review. Moody\u2019s is the only major agency still holding South Africa\u2019s debt at investment grade.<\/p>\n
A downgrade of the debt dominated in rands from Moody\u2019s will trigger forced capital outflows from passive investments.<\/p>\n
Shiells also added to the risks national elections due in May which carry \u201cpopular policy moves and reform paralysis\u201d.<\/p>\n
Analysts were still bullish about the support the currency has received from abroad even when local fundamentals have been disappointing.<\/p>\n
The most bullish forecaster in the sample said the rand would trade at 12.63 per dollar in a year while the most bearish suggested the currency could weaken to 15.50.<\/p>\n
Fed policymakers last month indicated they were pausing a rate increase campaign that began in December 2015 as the US central bank tries to sort out how much a weakening global economy could drag on the United States.<\/p>\n
South Africa\u2019s own rates were expected to be hiked 25 basis points to 7.00 percent in May, after the Reserve Bank left them unchanged last month.<\/p>\n
The Bank tries to keep inflation between its 3-6 percent comfort level and projected it would average 4.8 percent this year, down from a previous forecast of 5.5 percent. An average of 5.3 percent is expected in 2020.\u2014Reuters<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"
South Africa\u2019s rand will lose half of the 7 percent gains made against the United States (US) dollar since the start of the year over the next 12 months, pressured by fiscal constraints and weak growth, a Reuters poll found on Wednesday. The rand has topped emerging market currencies since the turn of the year, […]<\/p>\n","protected":false},"author":3,"featured_media":74143,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-74139","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry"],"_links":{"self":[{"href":"https:\/\/archive.times.mw\/index.php\/wp-json\/wp\/v2\/posts\/74139","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/archive.times.mw\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/archive.times.mw\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/archive.times.mw\/index.php\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/archive.times.mw\/index.php\/wp-json\/wp\/v2\/comments?post=74139"}],"version-history":[{"count":1,"href":"https:\/\/archive.times.mw\/index.php\/wp-json\/wp\/v2\/posts\/74139\/revisions"}],"predecessor-version":[{"id":74144,"href":"https:\/\/archive.times.mw\/index.php\/wp-json\/wp\/v2\/posts\/74139\/revisions\/74144"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/archive.times.mw\/index.php\/wp-json\/wp\/v2\/media\/74143"}],"wp:attachment":[{"href":"https:\/\/archive.times.mw\/index.php\/wp-json\/wp\/v2\/media?parent=74139"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/archive.times.mw\/index.php\/wp-json\/wp\/v2\/categories?post=74139"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/archive.times.mw\/index.php\/wp-json\/wp\/v2\/tags?post=74139"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}