Are the rand & markets at an inflection point?
If Jerome Powell stands pat, things will look up. If, however, US rate hikes continue, expect a bumpy ride, writes Nigel Dunn
Despite some tentative signs of hope, and calls from certain leaders for South Africans to view the glass as half-full rather than half-empty, the most commonly held view is to sell the rand and externalise your domestic assets as the country will struggle to overcome the financial cost of a decade of poor policies and a litany of sins, many of which are finally being exposed. Some of the populist policies being aired are exacerbating concerns. SA has some structural issues that, until properly addressed, are going to be an economic challenge in the long term. What we should look at is the daily chart of the dollar/rand ($/ZAR) in Figure 1, where there is a head and shoulders pattern with a potential count to 12.50. If this plays out, it might be the best gift many receive going into the festive season. The fuel price will come down, helped by an even sharper fall in the dollar oil price recently. There are two further charts that are instructive. A three-year weekly close of the $/...
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