The collapsing SA Rand suffers its longest run of quarterly losses on record and it may continue into year-end, while South Africa’s trade deficit almost doubled, from R6.8-billion to R16.3-billion. Meanwhile, the National Treasury is predicting South Africas ailing economy to grow at only 1.7 percent this year. The currency posted its 10th straight quarterly drop against the dollar in the three months through September, the longest stretch since at least 1971, when Bloomberg began compiling the data. “Our economic fundamentals are not a good story and I can’t see the commodity cycle turning. We’re probably going to see more rand weakness.” The currency retreated to its weakest level since January, closing in on the lowest since October 2008, after South Africa’s trade deficit widened more than economists’ estimates in August. The shortfall climbed to 16.3 billion rand ($1.4 billion) from 6.8 billion rand and more than the 8.7 billion- rand median estimate of 14 economists in a Bloomberg survey. Take note: South Africa’s trade deficit almost doubled, from R6.8-billion to R16.3-billion. Raw materials accounted for 60 percent of exports in 2013, with South Africas new colonisers, China, being the biggest buyer of coal, iron ore and other mining commodities. In the meantime, Chinas economy will be growing at its slowest pace in more than two decades. “Should China experience further slowdown, the rand will likely weaken as commodity prices ease once again,” Annabel Bishop, the Johannesburg-based chief economist at Investec, said. Investec revised its year-end forecast for the rand to 10.92 per dollar, compared with a previous forecast of 10, and said there is a 45 percent probability of a “down-case scenario” that could see the currency depreciate to 11.70 this year and 12.70 by the end of 2015. The National Treasury is predicting South Africas ailing economy to grow at only 1.7 percent this year. “Even with an end to the worst of the industrial unrest, South Africa’s problems are not over,” Razia Khan, a London- based Africa economist at Standard Chartered Plc, said in an e- mail yesterday. “There is no evidence of a hoped-for automatic correction in external metrics. The rand may have to adjust further.”
Posted on: Wed, 01 Oct 2014 07:28:57 +0000
Trending Topics
Recently Viewed Topics
© 2015