It Looks Like Deja Vu for South Africa’s Fast-Starting Rand By Bloomberg

© Reuters. It Looks Like Deja Vu for South Africa’s Fast-Starting Rand

(Bloomberg) — As if January’s potential record gain isn’t enough, the may be in for a positive February as well if history is any guide.

Seasonal data show that South Africa’s currency has strengthened against the dollar in February in seven of the past 10 years. Optimism about local political developments and a global risk-on mood spurred the rand to back-to-back monthly gains in January and February last year, and the same factors have already pushed it to its best start since at least 1999 this time round.

Finance Minister Tito Mboweni is scheduled to present the budget on Feb. 20, but few are expecting major changes from the numbers signaled in his mid-term fiscal statement in October. Should the budget outcome meet expectations, that may reduce the chance of Moody’s Investors Service lowering the nation’s credit rating when it reviews its assessment in March.

Still, investors should be mindful of the rand’s volatile nature, said Elna Moolman, a Johannesburg-based economist at Standard Bank Group Ltd.

“A pragmatic budget that doesn’t trigger negative sovereign credit rating action might be an initial catalyst for some appreciation,” she wrote in a client note. “There is a risk that, like early last year, rand strength will overshoot once optimism about policy and political reform is revived.”

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Source link

Leave a Reply

error: Content is protected !!