AGL 39.71 Decreased By ▼ -0.29 (-0.73%)
AIRLINK 129.10 Decreased By ▼ -0.43 (-0.33%)
BOP 6.75 Increased By ▲ 0.07 (1.05%)
CNERGY 4.48 Decreased By ▼ -0.15 (-3.24%)
DCL 8.58 Decreased By ▼ -0.36 (-4.03%)
DFML 40.37 Decreased By ▼ -1.32 (-3.17%)
DGKC 80.52 Decreased By ▼ -3.25 (-3.88%)
FCCL 32.82 Increased By ▲ 0.05 (0.15%)
FFBL 74.40 Decreased By ▼ -1.07 (-1.42%)
FFL 11.65 Increased By ▲ 0.18 (1.57%)
HUBC 109.15 Decreased By ▼ -1.40 (-1.27%)
HUMNL 13.85 Decreased By ▼ -0.71 (-4.88%)
KEL 5.30 Decreased By ▼ -0.09 (-1.67%)
KOSM 7.83 Decreased By ▼ -0.57 (-6.79%)
MLCF 38.85 Decreased By ▼ -0.94 (-2.36%)
NBP 63.30 Increased By ▲ 3.01 (4.99%)
OGDC 195.00 Decreased By ▼ -4.66 (-2.33%)
PAEL 25.80 Decreased By ▼ -0.85 (-3.19%)
PIBTL 7.41 Decreased By ▼ -0.25 (-3.26%)
PPL 155.15 Decreased By ▼ -2.77 (-1.75%)
PRL 25.80 Decreased By ▼ -0.93 (-3.48%)
PTC 17.58 Decreased By ▼ -0.88 (-4.77%)
SEARL 78.81 Decreased By ▼ -3.63 (-4.4%)
TELE 7.81 Decreased By ▼ -0.50 (-6.02%)
TOMCL 33.75 Decreased By ▼ -0.76 (-2.2%)
TPLP 8.41 Decreased By ▼ -0.65 (-7.17%)
TREET 16.49 Decreased By ▼ -0.98 (-5.61%)
TRG 57.80 Decreased By ▼ -3.52 (-5.74%)
UNITY 27.57 Increased By ▲ 0.14 (0.51%)
WTL 1.39 Increased By ▲ 0.01 (0.72%)
BR100 10,471 Increased By 64.6 (0.62%)
BR30 31,190 Decreased By -523.8 (-1.65%)
KSE100 97,735 Increased By 406.7 (0.42%)
KSE30 30,424 Increased By 231.1 (0.77%)

South Africa's rand will lose half of the 7 percent gains made against the 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, buoyed by external developments such as a potentially more "patient" Federal Reserve in raising interest rates and a revitalised mood in US-China trade talks.
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's. "There are still notable local risks aligned to subdued growth and fiscal challenges that warrant caution," said Christopher Shiells, emerging markets analyst at Informa Global Markets.
In October's budget review, South Africa's 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. "These challenges may lead to a sovereign credit rating downgrade from Moody's in March if the 2019 budget does not allay any lingering concerns," Shiells said.
The budget is due to be announced in about two weeks, followed by a Moody's review. Moody's is the only major agency still holding South Africa's debt at investment grade. A downgrade of the debt dominated in rands from Moody's will trigger forced capital outflows from passive investments.
Shiells also added to the risks national elections due in May which carry "popular policy moves and reform paralysis". Analysts were still bullish about the support the currency has received from abroad even when local fundamentals have been disappointing. 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.

Copyright Reuters, 2019

Comments

Comments are closed.