{"id":788983,"date":"2024-08-30T15:00:00","date_gmt":"2024-08-30T13:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=788983"},"modified":"2024-08-30T15:25:08","modified_gmt":"2024-08-30T13:25:08","slug":"rand-hits-best-level-in-over-a-year","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/finance\/788983\/rand-hits-best-level-in-over-a-year\/","title":{"rendered":"Rand hits best level in over a year"},"content":{"rendered":"\n

The rand climbed to a 13-month high on Friday, riding a wave of optimism about South Africa\u2019s economy and also buoyed by expectations of imminent Federal Reserve interest-rate cuts.<\/p>\n\n\n\n

The South African currency advanced as much as 0.8% on Friday to R17.6069 per dollar, the strongest level since July 2023. This brings its gain this year to 4.3%, the most in emerging markets after Malaysia\u2019s ringgit.<\/p>\n\n\n\n

Investors are looking more favourably at South African assets following the May 29 election, which saw the African National Congress enter a coalition with the main opposition Democratic Alliance and smaller parties. <\/p>\n\n\n\n

That raised expectations of much-needed reforms to stimulate the economy. With crippling electricity outages \u2014 known as load-shedding \u2014 also easing, the outlook for the economy is bright, said Razia Khan, chief economist for Africa and the Middle East at Standard Chartered Plc.<\/p>\n\n\n\n

Expectations of Fed policy easing starting next month are also prompting investors to look for higher-yielding assets such as South African rand bonds. <\/p>\n\n\n\n

That\u2019s seen net inflows of 16.4 billion rand ($930 million) into the country\u2019s debt market in the past five days, according to JSE Ltd. data compiled by Bloomberg.<\/p>\n\n\n\n

\u201cThe end to load-shedding has improved South Africa\u2019s growth outlook, while disinflation is now in place – the cumulative impact of earlier tightening,\u201d said Khan. <\/p>\n\n\n\n

\u201cWhen we add to this the favourable impact of Fed easing expectations, everything falls into place for a sustained and rally.\u201d<\/p>\n\n\n

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The end to regular power outages may lead to an upward revision<\/a> to economic-growth forecasts and help in the fight against inflation, South African Reserve Bank Deputy Governor Rashad Cassim said on Thursday.<\/p>\n\n\n\n

The SARB expects the economy to grow 1.1% in 2024 and 1.5% next year and forecasts inflation to slow to below the 4.5% midpoint of its target range, where it prefers to anchor expectations in the fourth quarter. <\/p>\n\n\n\n

The central bank is seen cutting its benchmark rate by about 123 basis points over the next year, according to forward-rate agreement pricing. The Fed is seen reducing rates by more than 200 basis points over the same period, widening the rate differential in the rand\u2019s favour.<\/p>\n\n\n\n

Rand volatility is also moderating, making the South African currency attractive in the carry trade, where investors borrow low-yielding currencies such as the dollar to invest in higher-returning assets. <\/p>\n\n\n\n

According to Bloomberg indexes, government and bonds returned 5.4% for dollar investors in August, compared with the 2.3% average return for emerging-market local-currency debt.<\/p>\n\n\n\n

South Africa\u2019s 10-year government bond yield dropped about 85 basis points this quarter to reach an 18-month low on Thursday. However, at around 10.55%, it is still among the highest in developing nations, leaving room for further bond gains.<\/p>\n\n\n\n

\u201cThe downside risk has meaningfully reduced as fiscal consolidation is a fundamental tenet of the newly established government of national unity (GNU) in South Africa, with the risk of a shift to the left and fiscal deterioration avoided,\u201d said Annabel Bishop, chief economist at Investec Bank. <\/p>\n\n\n\n

\u201cPositive investor sentiment toward South Africa persists, particularly from foreign investors.\u201d<\/p>\n\n\n\n

\n\n\n\n

Read<\/strong>: Shocking murder numbers in South Africa \u2013 70 people killed every day<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

The South African rand is the second-best performing emerging market currency in 2024, following Malaysia\u2019s ringgit. <\/p>\n","protected":false},"author":59,"featured_media":750456,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11121],"tags":[1850,26],"class_list":["post-788983","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-bloomberg","tag-headline"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/788983","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=788983"}],"version-history":[{"count":4,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/788983\/revisions"}],"predecessor-version":[{"id":788996,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/788983\/revisions\/788996"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/750456"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=788983"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=788983"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=788983"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}