{"id":276683,"date":"2018-10-11T07:49:13","date_gmt":"2018-10-11T05:49:13","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=276683"},"modified":"2018-10-11T07:50:09","modified_gmt":"2018-10-11T05:50:09","slug":"why-this-analyst-sees-the-rand-moving-to-the-lower-13s-against-the-dollar","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/banking\/276683\/why-this-analyst-sees-the-rand-moving-to-the-lower-13s-against-the-dollar\/","title":{"rendered":"Why this analyst sees the rand moving to the \u201clower 13s\u201d against the dollar"},"content":{"rendered":"
\n

Nhlanhla Nene has been dropped from South Africa\u2019s cabinet twice in three years – and his misfortunes have been the catalyst that turned one of the biggest rand bears into one of the biggest bulls.<\/p>\n

As the currency declined this week amid speculation that Nene would resign as finance minister, Nomura International Plc recommended a long-rand position versus the dollar, entering the trade at R14.85 and targeting a move to the \u201clower 13s\u201d over six months.<\/p>\n

That compares with a median forecast of R15.14 in a Bloomberg survey of 24 analysts, and would place Nomura among the four most bullish forecasters.<\/p>\n

That\u2019s quite a turnaround from January 2016, when Nomura predicted the rand would slump to R19 per dollar, from around R16, after then president Jacob Zuma had unexpectedly fired Nene as finance minister the previous month. That compared with the R15.30 median call of 32 analysts in a Bloomberg survey at the time, and would have positioned Nomura as the most bearish among them.<\/p>\n

While Nomura described Nene\u2019s axing in December 2015 as a \u201cshock\u201d larger than the 2008 financial crisis, his ousting this time round would have \u201cminimal\u201d effect on markets, and could even be positive as a signal that the government won\u2019t tolerate corruption, strategists including Henrik Gullberg wrote in a note on Tuesday.<\/p>\n

In addition, a sustained trade surplus and hawkish central bank would support the rand, they said.<\/p>\n

\u201cThe trade balance has improved significantly on the back of the sell-off in the rand when Nene was first dismissed, which made the rand very competitive,\u201d Gullberg said on Wednesday. \u201cNene having to go despite not being found guilty of wrongdoing\u201d is a sign that tolerance of corruption \u201cis much lower than it was in the past,\u201d he said.<\/p>\n

Nomura\u2019s view is at odds with others including Societe Generale SA and Deutsche Bank AG, who have recommended shorting the rand. But it is already reaping the reward: after President Cyril Ramaphosa replaced Nene as finance minister with former central bank governor Tito Mboweni on Tuesday, the rand strengthened 1.9% to R14.56 before giving up some of its gains on Thursday to trade at R14.66.<\/p>\n

The rand declined 25% in 2015, reaching a record against the dollar in December after Zuma fired Nene. This year, it\u2019s down 17%, buffeted by headwinds including a stronger dollar, rising US rates and crises in Turkey and Argentina. But the worst is probably over, according to Gullberg, provided Moody\u2019s Investors Service holds the country\u2019s credit rating at investment level in an assessment scheduled for Friday.<\/p>\n

\u201cI think that will provide a further boost to the rand, the external environment permitting,\u201d he said.<\/p>\n

\"\"<\/a><\/p>\n

\n

Read: How much more you\u2019re going to be paying for tech thanks to the weak rand<\/a><\/strong><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Nhlanhla Nene has been dropped from South Africa\u2019s cabinet twice in three years – and his misfortunes have been the catalyst that turned one of the biggest rand bears into one of the biggest bulls.<\/p>\n","protected":false},"author":59,"featured_media":262961,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[961],"tags":[26,6722],"class_list":["post-276683","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-banking","tag-headline","tag-nomura"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/276683","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\/59"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=276683"}],"version-history":[{"count":3,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/276683\/revisions"}],"predecessor-version":[{"id":276695,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/276683\/revisions\/276695"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/262961"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=276683"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=276683"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=276683"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}