South Africa's rand rally is probably on its last legs as positive emerging market sentiment fades and contentious issues in local politics come to the fore, a Reuters poll found on Thursday. The start of South Africa's credit ratings reviews next month, an African National Congress conference in June and a leadership conference to pick President Jacob Zuma's successor in December all have currency strategists on alert.
The rand is forecast to weaken 8 percent to 14.08 per dollar in 12 months, according to a poll of up to 38 strategists taken in the last three days. It currently trades at 13.06 per greenback.
Christopher Shiells of Informa Global Markets in London said the rand has remained one of the better emerging market performers in 2017 largely due to the fact that political risks in South Africa have not increased.
"But the rand remains vulnerable to domestic political risks as the year-end ANC conference looms, as well as Federal Reserve interest rate hikes, due to South Africa's current account vulnerability," he said.
"We see the above factors driving the emerging markets rally running out of steam after the first quarter," Shiells added.