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Weaker global growth, market volatility and the political climate are the biggest issues affecting the rand, according to a Bloomberg poll.
The survey, released on Monday, captured the opinions of more than 160 local bankers, CEOs, CFOs corporate treasurers, and foreign exchange and hedge fund executives at a Bloomberg event two weeks ago.
At the time, Reserve Bank deputy governor Daniel Mminele warned that the rand and other emerging-market currencies would remain volatile, adding complexities to monetary policy.
Mminele cited the continued tightening in global financial conditions, a change in investor sentiment towards emerging markets, escalating trade conflicts and geopolitical developments as key risks to the rand.
According to the poll, more than one-third (37%) of those who responded cited global economic growth and market volatility while a third (31%) said it was SA’s foreign investment. A few (21%) said that US monetary policy would affect the rand, while 11% cited trade friction and tariffs
On the local front, more than half the participants said SA’s political environment would affect the rand, while 22% thought the trajectory of interest rates would affect the currency.
An improvement in the country’s political environment could help the rand strengthen significantly, said Old Mutual Investment Group’s head of economic research, Johann Els.
The poll found that 17% think SA’s persistently high unemployment rate will affect the rand while 7% cited the battered mining industry.
The next big local events that could influence the rand are the budget, the response from Moody’s and the national elections, said Standard Bank economist Elna Moolman.
Investec Bank chief economist Annabel Bishop said that US monetary policy is placing possible additional pressure on the rand, especially as SA monetary policy is unlikely to keep pace with the expected rate and magnitude of interest rate hikes in the US.
Almost three-quarters of the participants said they expect the dollar-rand exchange rate to end 2019 within the broad range of R12-R15.
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Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.