{"id":146831,"date":"2016-12-09T09:20:06","date_gmt":"2016-12-09T07:20:06","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=146831"},"modified":"2016-12-09T09:20:06","modified_gmt":"2016-12-09T07:20:06","slug":"3-reasons-why-analysts-are-wrong-about-the-rand-in-2017","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/business\/146831\/3-reasons-why-analysts-are-wrong-about-the-rand-in-2017\/","title":{"rendered":"3 reasons why analysts are wrong about the rand in 2017"},"content":{"rendered":"

The World’s fourth-biggest foreign-exchange trader, Deutsche Bank, believes that the rand’s predicted 12% drop in 2017 is incorrect.<\/p>\n

Speaking to Bloomberg<\/a><\/strong>, it provided three reasons why the analysts have got it wrong:<\/p>\n

1. Inflation Outlook<\/strong><\/h3>\n

“Inflation is slowing. The South African Reserve Bank sees the rise in consumer prices averaging 5.8 percent in 2017, down from a seven year high of 7 percent in February”, said Deutsche Bank economist Danelee Masia.<\/p>\n

“That means the yield on South African assets will remain attractive, even as U.S. interest rates rise”.<\/p>\n

2. Economy Rebounding<\/strong><\/h3>\n

Growth should accelerate to 1.4% in 2017, more than the central bank\u2019s estimate of 1.2%, as\u00a0companies rebuild profit margins through a combination of cost efficiencies, job cuts and wage restraint, according to Deutsche Bank.<\/p>\n

A rebound in agriculture following the worst drought in more than 100 years may also fuel growth, it said.<\/p>\n

3. Current-Account Gap<\/strong><\/h3>\n

The current-account deficit, is narrowing as subdued demand constrains imports. The shortfall shrank to 3.1% of gross domestic product in the second quarter, from 5.3% the previous three months.<\/p>\n

Deutsche Bank predicts it will decline to the smallest margin in six years in 2017, making the rand less vulnerable to capital outflows as the U.S. lifts interest rates.<\/p>\n

\n

The rand has faced a rocky year in 2016, with many ups and downs, shifting along with the roller coaster year of Zuma\u00a0scandals, slowing growth, drought and the local elections.<\/p>\n

Economists had predicted that the currency would end the year between R16.50 and R17.00 to the dollar – however they were proven wrong (despite the odds), with the rand currently sitting at R13.72 to the dollar.<\/p>\n

The negative predictions did not factor in the many external surprises that hit 2016, however – specifically the UK’s shock vote to leave the European Union which strengthened the rand, as well as the US election which saw businessman Donald Trump claim victory.<\/p>\n

These factors, along with South Africa beating the odds and avoiding a downgrade to junk status, were boons to the currency which economists could not predict.<\/p>\n

2017’s prospects are still up in the air, with junk status still looming, and the ANC’s elective conference (and associated political campaigning) still to come.<\/p>\n

\n

Read: A look at The Arch \u2013 a stunning R600 million development planned for Umhlanga<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

The World’s fourth-biggest foreign-exchange trader, Deutsche Bank, believes that the rand’s predicted 12% drop in 2017 is incorrect.<\/p>\n","protected":false},"author":10,"featured_media":93735,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9872],"tags":[26],"class_list":["post-146831","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-headline"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/146831","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=146831"}],"version-history":[{"count":11,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/146831\/revisions"}],"predecessor-version":[{"id":146857,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/146831\/revisions\/146857"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/93735"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=146831"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=146831"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=146831"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}