Rand has been world's worst performer

AS THE year draws to a close - and the SA currency is being battered in the foreign exchange market - economists are now beginning to forecast an interest rate hike in the early part of the New Year.
This is justified, they say, if the SA Reserve Bank's targeted inflation rate - of CPIX remaining between 3% and 6% during 2002 - is to be met.
The feeling is that if the rand goes back to levels justified by fundamentals (around R9 to the US$) then the inflation target will be met. But, if it continues to wallow in the R11 to the US$ region, then the target will be missed and SARB interest rates may be raised.
The rand has lost 29% of its value on a trade-weighted basis so far this year. The real downslide has been since October making the rand the world's worst performing currency for the past six months.
The feeling is that, as business winds down for the festive season holidays, the rand will remain in R11.00-R11.25 to the US$ range, that increased imported price pressures will continue and that an interest rate hike looks increasingly likely.