AGL 40.40 Increased By ▲ 0.20 (0.5%)
AIRLINK 129.25 Increased By ▲ 0.14 (0.11%)
BOP 6.81 Increased By ▲ 0.21 (3.18%)
CNERGY 4.13 Increased By ▲ 0.10 (2.48%)
DCL 8.73 Increased By ▲ 0.28 (3.31%)
DFML 41.40 Increased By ▲ 0.15 (0.36%)
DGKC 87.75 Increased By ▲ 0.75 (0.86%)
FCCL 33.85 Increased By ▲ 0.50 (1.5%)
FFBL 66.40 Increased By ▲ 0.50 (0.76%)
FFL 10.69 Increased By ▲ 0.15 (1.42%)
HUBC 113.51 Increased By ▲ 2.81 (2.54%)
HUMNL 15.65 Increased By ▲ 0.42 (2.76%)
KEL 4.87 Increased By ▲ 0.09 (1.88%)
KOSM 7.62 Decreased By ▼ -0.21 (-2.68%)
MLCF 43.10 Increased By ▲ 1.20 (2.86%)
NBP 61.50 Increased By ▲ 1.00 (1.65%)
OGDC 192.20 Increased By ▲ 9.40 (5.14%)
PAEL 27.05 Increased By ▲ 1.69 (6.66%)
PIBTL 7.26 Increased By ▲ 1.00 (15.97%)
PPL 150.50 Increased By ▲ 2.69 (1.82%)
PRL 24.96 Increased By ▲ 0.40 (1.63%)
PTC 16.25 Increased By ▲ 0.01 (0.06%)
SEARL 71.30 Increased By ▲ 0.80 (1.13%)
TELE 7.25 Decreased By ▼ -0.05 (-0.68%)
TOMCL 36.29 Decreased By ▼ -0.01 (-0.03%)
TPLP 8.05 Increased By ▲ 0.20 (2.55%)
TREET 16.30 Increased By ▲ 1.00 (6.54%)
TRG 51.56 Decreased By ▼ -0.14 (-0.27%)
UNITY 27.35 No Change ▼ 0.00 (0%)
WTL 1.27 Increased By ▲ 0.04 (3.25%)
BR100 9,967 Increased By 125.2 (1.27%)
BR30 30,751 Increased By 714.7 (2.38%)
KSE100 93,292 Increased By 771.2 (0.83%)
KSE30 29,017 Increased By 230.5 (0.8%)

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.