Betting on the rand

“Rand won’t recover – RMB”, says the headline on Fin24.com. According to Rand Merchant Bank’s analysts, the rand will retreat back to R10 a dollar, and it won’t stage a strong comeback, as it did after its dramatic slump in 2001.

Well, the analysts at RMB may be right. But I covered the rand as a reporter for Bloomberg during and after the 2001 slump, and that was what just about every analyst said then too. And their consistently pessimistic forecasts turned out to be consistently wrong as the rand clawed back its losses and appreciated from more than R13 a dollar to less than 6, at one point. Those analysts cost some of their clients a lot of money – for example, South Afircan Airways, which hedged heavily against further rand depreciation and got caught on the wrong side of the bet.

South Africa’s fundamentals at this stage are much stronger than those of its major trading partners. So let’s wait and see what the rand does.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: