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Robust rand defies the odds

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Cape Town - The rand's current stellar performance seems inexplicable, given the absence of growth in the domestic economy, rising political and regulatory uncertainty, and the real threat of losing our investment grade rating.

However, the unit’s relative strength is attributed to two key factors: AB InBev’s takeover of SABMiller and the global search for income yield. Unfortunately, the first is once-off and the second is living on borrowed time, says Overberg Asset Management in its weekly overview of the South African economic and investment landscape.

"It is rumoured that AB InBev has been accumulating rand in order to pay SABMiller’s South African shareholders. They make up around 9.5% of SABMiller’s shareholder register and will need to receive around R120bn from AB InBev."

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