The rand could weaken to R21.40 to the US dollar in 2024 and even further to R21.90 by the end of next year according to Investec’s worst-case scenario. The rand was already under pressure over the past week due to several factors weighing it down.
The International Monetary Fund also warned about persistently high global inflation in its latest World Economic Outlook, highlighting that its projections for global economic growth in the next five years have steadily declined since the global financial crisis.
She warns that with other recent inflation measures disappointing on the upside for March, there is a risk that this measure too will prove stickiness, or see some upwards pressure, which will add to expectations on the delay in US rate cuts. The other main issue affecting the rand is political uncertainty ahead of South Africa’s national election on 29 May, which is causing investors to be cautious, Bishop says.
In this scenario, Bishop sees the rand stabilise and strengthen slightly, while weather patterns will affect food prices and therefore inflation. In addition, there is no nationalisation and little expropriation without compensation that has no negative effect on the economy, while the wars in Ukraine and the Middle East tensions persist and do not escalate.Investec’s extreme up case scenario sees the rand average R16.
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