Economists predict R6,40 to the US$ by year end

FOR THOSE taking bets on the likely exchange rate at the end of this year - the latest estimate from the Standard Bank's economics division is in the region of R6.40-R6.50 to US$1.
Our treasury guys are a bit bearish, a spokesman told FTW. But you must remember that - whatever the current situation would indicate about the likely rate - we still see the rand as extremely volatile.
It has, for example, fluctuated this week alone (January 11-to-13) between R5.80 and R6.15, and is still largely volatile even in the shorter term - hours rather than days.
And that volatility is not likely to go away quickly.
While a weakness in international commodity prices played a part in last year's downfall, the main driving force was in capital flows - short term investments which move in-and-out of the country in milliseconds, at the touch of a computer button.
But one thing that is now in our favour, said the Standard's spokesman, is that a lot of the hot money went out last year.
However, the Oriental crisis still lurks there, constituting a repercussive threat to countries of emerging market status - as money-men get the wobbles about anything but blue-chip investments if any bad news flows out of the East.
And Brazil - just categorised as of emerging market status, despite its large economy - is also throwing out a few wobbles of its own.
News from the Standard is that the central government instituted an austerity programme to try to overcome the country's economic ailments. But, in Brazil's federal system, one of the states has decided to get bolshie about a perceived disfavour done to it by the central authorities - and is refusing to play the game.
This, said the spokesman, is rattling the investors at the moment.
However, if Brazil holds up, it might be better for us.