Rand in recovery mode after IMF raises SA growth forecast

The rand targeted a recovery in early trade on Friday, having surrendered nearly 3% to the dollar on Thursday, amid political uncertainty in the US, which forced investors to seek safe-haven assets.

News out of Brazil, where president Michel Temer is accused of corruption, also knocked emerging market currencies.

By 10h00, the rand firmed by a percent, to R13.27. It also made against against the euro and UK pound.

On Thursday, the International Monetary Fund (IMF) lifted South Africa’s growth forecast for 2017, from 0.8%, to 1%.

The IMF pointed to recoveries in the agriculture and mining sectors, but warned that perceptions of policy uncertainty pose a downside risk.

South Africa’s Treasury expects growth of 1.3% this year, up from 0.3% in 2016.

General Motors’ (GM) announced that it will cease operations in South Africa as manufacturing in South Africa would not provide the company with the returns required to support its global strategies and investments.

Marius Croucamp, a spokesperson for trade union, Solidarity, warned that GM’s withdrawal from the South African market comes as a ripple effect of Ppresident Jacob Zuma’s ill-considered reshuffling of the cabinet in April this year.

“We are beginning to see the negative impact of this downgrade. Fewer investments and lower economic growth are but the start,” he said.

He said that Solidarity is apprehensive about an exodus of other larger companies as a result of the poor political and economic policies that are currently in place. “The economic and social consequences of GM’s withdrawal give cause for major concern,” Croucamp said.

Read: General Motors pulls out of South Africa

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