LIRA CONTAGION
Why analysts expect the rand to strengthen
SA’s high bond yields, relatively high interest rates and prudent fiscal policies have acted as a buffer for the rand
Analysts believe the rand is bound to make a comeback after it weakened through R14 to the dollar on Friday for the first time since November 2017, as a plummeting Turkish lira caused widespread contagion among emerging-market currencies. The rand touched R14.15/$ as the lira went into free fall, tumbling more than 18% against the dollar at one point, after President Donald Trump tweeted that the US would double tariffs on Turkish steel and aluminium. SA’s high bond yields, relatively high interest rates and prudent fiscal policies have acted as a buffer for the rand, with market risks coming from low GDP growth and growing sovereign debt. "We had nothing really negative coming out of SA before the tumble on Friday," said Umkhulu Consulting analyst Adam Phillips. "Should things calm down, the rand will be one of the first currencies to benefit." During the middle of last week increased business confidence numbers for July, as well as positive reaction from Eskom unions to the power ...
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