Weak rand could lead to rate hike — and soon, Annabel Bishop warns
There is little on the domestic front to lift the rand, and if it stays below R15/$, we could see an interest rate increase as soon as September, the Investec chief economist says
Sustained rand weakness is raising the prospects of a Reserve Bank interest rate increase, as risk-off trade on global markets turns against SA specifically, according to Investec chief economist Annabel Bishop. There is little momentum behind domestic factors that would support a stronger rand, and should the rand sustain a breach above the R15/$, the Bank may raise rates 25 basis points as soon as September, Bishop said on Wednesday. The rand has been battered along with other emerging-market currencies in August by rising concern about the spillover effects of Turkey’s financial crisis. The rand was the second worst performing currency in the first two weeks of the month, weakening by about 17%, beaten only by the lira’s 45% depreciation.
As investors sold off emerging-market assets, the rand was hit by a spate of bad news, including a parliamentary bill introduced by the EFF to nationalise the Reserve Bank, and further comments by ANC officials on expropriation of land wit...
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