Cape Town – South Africans should prepare themselves for more drastic shifts in the rand as the rating downgrade looms, an analyst warned after the rand went from R14.23 to R14.72 on Tuesday, devaluing the currency by up to 2.5%.
While global risk aversion and a spike in domestic corporate import demand after the public holiday on Monday was the main cause, analyst Adam Phillips of Umkhulu Consulting warned on Wednesday that the fluctuation would be normal going forward.
Phillips believes the rand, which was the worst performing emerging markets currency on Tuesday, will return to R15/$ in May. If that sounds bearish, Nomura emerging market economist Peter Montalto forecasts that the rand will hit R19/$ by the end of 2016. By 07:45 on Wednesday, the rand was trading at R14.67.