South Africans are likely to hear a broad variety of rand estimates this year, ranging from R14/dollar to R17/dollar – but Dr Francois Stofberg, senior economist at the Efficient Group, believes that R15/dollar is a more accurate indication of the rand's long-term worth.
Stofberg said he would advise investors to transfer money abroad at any level below R15.50 in a research note released on Wednesday (19 January). “The rand has the potential to appreciate to levels around R14/dollar or decline to levels near R16/dollar. However, in our experience, they are simply temporary fluctuations.”
The rand is presently stabilising below R15.50/dollar, according to Investec chief economist Annabel Bishop, but is likely to approach R15.20/dollar this month, in line with usual January advances. For the first three weeks of this quarter, the native currency has averaged R15.67 per dollar, she noted.
“Foreigners have been bullish on South African markets so far this year, buying R4.4 billion in SA bonds (net of sales) and R1.2 billion in shares (also on a net basis) in the middle of last week.” So far this year, foreign inflows into South African portfolio assets have totaled R3 billion.
“Over the next three months, the South African Reserve Bank's hawkish monetary policy rhetoric will assist in keeping the rand within our fair value range,” it stated.“In Q4 2022, the current account is anticipated to turn negative, resulting in continued rand weakening.” Through 2022, a more hawkish Fed would weigh on the currency.
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