The South African rand, which is usually a bellwether for other emerging markets, has diverged from global trends – largely thanks to the energy crisis.
, the rand started to diverge significantly from other emerging markets during the fourth quarter of last year.
The bleak news cycle began in December, when investors mulled the prospect of President Cyril Ramaphosa stepping down in the wake of the so-called Phala Phala scandal. The Bureau for Economic Research also noted the role local factors seem to be playing in the rand’s movements. In March, the Sarb revised its GDP forecast lower to 0.2%, reiterating that the energy crisis stands to shave two percentage points from growth this year. The central bank’s forecast was still higher, although only slightly, than that of the International Monetary Fund, which expects the country’s economy to grow a mere 0.1% this year.
In its latest statement, the Sarb’s monetary policy committee revised the implied starting point for its rand forecast to R18.06 to the US dollar, compared with R17.32 at the time of the previous meeting. The committee also signalled further currency weakening.
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