Alan Peat THE STATE of the American economy will be the prime driving force behind any changes to the exchange rate of the rand in the next nine months, according to Standard Bank economist, Monica Ambrosi. “The general view is that the US is recovering strength,” she told FTW, “with all the signs pointing to this and the accompanying growth in the strength of the US dollar.” The repercussion is an almost automatic downward pressure on the rand value. Another determining factor in exchange rate is the balance of payments (BoP). Ambrosi added. She expects some deterioration in the BoP with imports staying strong as consumers continue to buy, and exports expected to drop slightly. The pattern of continuing consumer spending she determines will come from the expected interest rate cuts effectively supplementing any loss in disposable income over the next few months. “So the BoP will also put pressure on the rand,” said Ambrosi. A further pressure is political. “The forthcoming April elections will probably lead to a weakening of the rand in the run-up period,” said Ambrosi. But the forecast for the rand in the next nine months from Ambrosi - with the rand expected to lose less than 10% against the four major currencies - suggests that none of the expected pressures will have a major effect on the SA currency. Rand exchange rate forecast - updated September 3 Q3 2003 Q4 2003 Q1 2004 Q2 2004 USD/ZAR 7.45 7.70 8.0 8.30 EUR/ZAR 8.34 8.47 8.64 8.88 GBP/ZAR 11.92 12.17 12.64 12.95 ZAR/JPY 15.80 15.20 14.80 14.30 SOURCE: Standard Bank economics division
