It amazes me to read predictions from analysts such as RMB’s John Cairns and Chris Turner of ING group that the rand will rebound by year end. It has dropped 7% since September 6 and their pronouncements came on the same day the IMF dropped its GDP growth forecast for SA to 0.7%. Even Greece is expected to record 2.3% growth and China is projected at 6.8%.
Are these analysts taking into consideration that on top of all the fundamentals and negative readings we get, and the warnings from the ratings agencies about our pathetic performance, we have other big swords hanging over our heads?
These are that the rand remains sensitive to political developments, weak growth, another downgrade, the medium-term budget on October 25 with its projected shortfall of R50bn, inflation that will be on an upward trajectory as the petrol increases work through the system and the battle to succeed President Jacob Zuma that has frozen anything else going on in the government.
JM Bouvier Bryanston