A second-wave of Ramaphoria may be on the way – and it could hit the rand

A second dose of ‘Ramaphoria’ could be in store for the rand, according to a Bloomberg survey of executives that found domestic politics would be the most significant issue affecting currency moves in the next year.

A decisive victory for the ruling African National Congress in the May 2019 elections — followed by policy improvements — could see the currency strengthen about 6% from its current level, according to Elna Moolman, an economist at Standard Bank and a participant in the survey.

Cyril Ramaphosa’s victory in the ANC leadership vote in December last year sent the rand to a three-year high against the dollar in February, before the currency turned as emerging markets came under strain.

The survey captured the opinions of more than 160 local bankers, CEOs, CFOs, corporate treasurers, foreign-exchange and hedge-fund executives who attended Bloomberg’s Foreign Exchange Summit FX18 last month in Johannesburg.

  • More than half of participants said South Africa’s political environment would be the most important local issue affecting the rand in 2019
  • Only 22% said the South African Reserve Bank would influence the rand’s direction
  • More than a third of respondents said global economic growth and market volatility were the most important macro factors affecting the rand today, while 31% said it was foreign investment in South Africa
  • Africa’s most-industrialized economy is particularly vulnerable to capital outflows as it relies on portfolio investments to fund a persistent current-account deficit. Non-resident have already sold a net R49.9 billion ($3.5 billion) of South African equities and 64 billion rand of bonds, the most in record since Bloomberg started tracking the data in 1998
  • About 21% said US monetary policy was the most important factor affecting the rand, while 11% opted for trade friction and tariffs
  • Nearly three-quarters of the participants said they expect the rand-dollar exchange rate to end 2019 within the broad range of R12 to R15  per dollar; 26% predict the rand would strengthen to below R12, and only 5% saw if heading above R15.


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A second-wave of Ramaphoria may be on the way – and it could hit the rand