The recent slump in South Africa's rand is over and the currency will hover around current levels in the coming year as investors shrug off credit rating reviews and domestic elections, a Reuters poll found. At the time of the last poll in early February the rand was up around 7 percent on the year and forecasters then said it would only lose about half those gains in the next 12 months.
But the currency shed the whole 7 percent last month as concerns about the US-China trade war and power blackouts cast a shadow over South Africa's economic prospects. So in a February 28-March 5 poll of 30 foreign exchange strategists, the 12-month consensus was slashed from February's. The rand is now forecast to be at 14.20 per dollar in a year compared to 13.85 predicted last month. Heavily traded, the rand often either leads or lags the pack of emerging market currencies in bouts of market volatility due to changes in global risk sentiment rather than investors' view of local fundamentals.
"The rand would probably continue to swing up and down until the elections in May," said Rafiq Raji, managing director and chief economist at Macroafricaintel in Lagos. Official data showed South Africa's current account deficit narrowed to 2.2 percent of gross domestic product in the fourth quarter, a good omen for the local currency, and a Reuters poll found economic growth was expected to accelerate.
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