South African Rand Forecast to Recover Against Euro, Dollar and Pound by Ebury
Analysts at a leading currency risk management firm have said the recent sell-off in the ZAR has been excessive and a broad-based recovery is due to take place over 2016 and into 2017.
New foreign exchange research from Ebury has suggested we are about to witness a sharp reversal in the GBP/ZAR uptrend.
The exchange rate has been trending higher since early 2015 when levels between 17.00 and 19.00 were the norm.
The rate’s ascent accelerated at the turn of the year on a combination of both unwelcome domestic policy and global market conditions. Shocks over the slowing growth rate in China have been particularly unkind to the Rand in 2016.
However, the move is looking excessive argue researchers at Ebury who have forecast the Rand to strengthen and push the pound to rand rate back towards the 20.00 level.
A recovery against the euro and US dollar is also expected.
Ebury, a currency hedging specialist, is regarded as an accurate foreign exchange forecaster and contributes to the FX polls conducted by Bloomberg FXFC.
Latest Pound / SA Rand Exchange Rates
  | Live: 22.6262▼ -0.11%12 Month Best:25.4721 |
*Your Bank's Retail Rate
| 21.8569 - 21.9474 |
**Independent Specialist | 22.3095 - 22.4 Find out why this is a better rate |
* Bank rates according to latest IMTI data.
** RationalFX dealing desk quotation.
Exports to Boost the Economy
The message coming from Ebury is that all is not as bad as it seems in South Africa.
“There remain a number of factors supporting the economy and its currency. The recent sharp decline in oil prices and South Africa’s characteristic as a net importer of oil, has benefitted the balance of trade,” says the forecast note.
The sharp Rand devaluation has also significantly increased the competitiveness of the South African economy and Ebury expect exports to provide a pleasant upwards surprise during 2016.
Furthermore, the prospect of central bank intervention remains elevated with analysts believing the South African Reserve Bank could well draw on its accumulation of foreign exchange reserves to defend the ZAR if need be.
“The interest rate also remains solidly above the level of inflation, meaning that real interest rates are comfortably positive,” say Ebury.
Analysts believe that the recent ZAR sell-off has been excessive and therefore forecast the South African Rand to reverse some of its recent losses in the short-term, before stabilising against the US Dollar throughout 2016.
“However, we are pushing back our timetable for ZAR appreciation given the unexpected violence of
the recent sell-off,” say Ebury.
Analysts see the GBP to ZAR conversion hovering at 23.30 in the first quarter of 2016 before falling back to 21.85 by mid-year.
The rate then moves towards 21.20 in the third quarter before closing the year at 20.80.
Rand forecasts for 2017 show GBP/ZAR at 20.50.
Meanwhile, the US dollar to Rand exchange rate is forecast at 16.00 in the first quarter of 2016 and moving down to 15:00 by mid-2016.
The exchange rate falls further to 14:50 in the third quarter before closing the year at 14.25.
A rate of 14:00 is seen in 2017.
With regards to the euro to rand exchange rate, 16:40 is forecast for the first quarter 2016.
A move lower to 14.85 transpires towards the middle of the year with further falls to 14.20 by September.
The exchange rate is tipped to close the year out at 13.85 and is expected to trade at 13.30 in 2017.
