Rand rides wave of euphoria, but volatility lies ahead

Rand rides wave of euphoria, but volatility lies ahead

Senior Economist at Efficient Group (EFG), Francois Stofberg, says South Africans should expect a volatile year ahead for the Rand.

South African Rands notes stacked / iStock
South African Rands notes stacked / iStock

The local currency has strengthened to its best levels so far this year, starting Thursday morning at R14,87 to the US dollar.

 

However, Stofberg says the Rand – like other currencies and world markets – is flexing its muscles in reaction to the inauguration of Joe Biden as America’s 46th President.  

 

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“Currently we see the rand being driven more by a global story, a global success story, a global growth story. The idea here is that Joe Biden was now elected and is now making peace and going to the peace accord and now going back to world health. It’s all just good news and butterflies and the world is at peace." 

"Usually, in times of high euphoria, you see a general pickup in sentiment especially towards emerging markets we are being pulled with the tide. As a result, we see the rand strengthening,” says Stofberg.

 

He adds as far as the Rand is concerned, South Africa should expect a year of volatility that could see the currency weakening dramatically.

 

“The rand is going to be volatile this year and I am sending a cautionary warning. I think we are going to see more or less of what we saw last year, the rand trading at levels of R14 and possibly R19,” adds Stofberg.

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