Rand may have bottomed – and again maybe not

THE RAND is down 12% this year against the US dollar, six times more than the nextworst performer among the world’s most widely traded currencies. It has steadily weakened from 6.50:$ two years ago to around 7.80:$ (20% down). “Our current account deficit ranks second highest globally and as such draws unfavourable attention. Our reputation is being ruined by hanging out with the wrong crowd,” says FNB chief economist Cees Bruggemans. “Polokwane sent messages that weren’t quite welcomed by the non-comrades of the world. Eskom as an important public corporation sent an even terser message,” he adds. But, there are signs that the rand is nearing the bottom of its range. Nedbank’s Treasury Strategic Research team says the rand has therefore absorbed much of the bad news and probably has adjusted appropriately for the increased risks to the growth outlook. “Whether it falls further, consolidates at these levels or rebounds will depend on how quickly government can restore confidence or at least make sure that it is not eroded further,” says Nedbank.