WONDERING WHERE the rand will be by the end of this year? About R5,25 to the US dollar, according to the latest predictions of the Standard Bank's economics division.
For the year, the Standard's averages run at R4,98 in the 1st quarter; R5,10 in the 2nd; R5,15 in the 3rd; and that R5,25 in the 4th, according to economist, Bruce Teubes.
That's an indicator of the trend, but the market is still volatile, Teubes added.
The collapse of currencies and share prices in the East - a situation which will take some time to resolve, according to Teubes - is a factor in this volatility. But he shied away from suggesting it might have a blow-out effect, and prefers to decribe it as exerting a bit of pressure on the SA currency. This along with similar strain on currencies in other emerging markets - which all lose some of their attraction as things get really tough.
The gold price - now at a historical low - will also have an effect. While Teubes describes it as being a less important factor in defining SA's exchange rate than it has in the past, he still sees the large price drop in recent times having an effect.
It also has a multiplier effect throughout other sections of industry and the economy, he said, and will still dampen sentiment. The Standard, sitting around their crystal ball, also generally came to the conclusion that the rand is actually undervalued - given the fundamentals behind it.
This, said Teubes, warns that - although we expect the rand to be under pressure - if things in Asia do settle down at the end of the year, then the sentiments to emerging markets could soften a bit.
This, in turn, could lead to a turnaround in the currency.
