Economist forecasts currency level for rest of 2005

Is the rand in full retreat? It’s certainly the way it looks, according to FNB chief economist Dr Cees Bruggemans, who cites a number of reasons for the current state of play. “We breached 6.60:$ with ease and the market is clearly contemplating 7.00:$ after having reached 5.60:$ at the beginning of the year. The reasons, he says: “The dollar has rerated stronger. Our fundamentals have weakened and traders have the bit between their teeth – a powerful cocktail that takes some doing to turn around.” Bruggemans expressed the hope that exporters would lock in while the rand weakness reaches a crescendo, “instead of hoping like Cosatu for 10:$, for that may be hard to achieve. We need a roaring dollar bull market for that. Our fundamentals are simply not weak enough to warrant that kind of blowout, not with our credit rating, $20bn in the kitty and no forward book to sink us.” His forecast for the rest of 2005 is 6.00-7.50:$. “Next year could be good for 5.00-7.00:$.”