Focus on South Africa

I thought it would be worth looking at the South African Rand (ZAR), in terms of its performance as a currency in recent times and prospects for the future.

Economically, South Africa is a mixed bag. With an abundance of natural resources, the country is a major commodities exporter; its economy has opened up dramatically in recent times. And yet it still faces huge social and structural issues. Moreover, it has not been immune to the global economic downturn. China is a major resources importer and its slowdown has hit South African exports. The IMF recently said that if downside risks to global economic growth materialise, there will be greater challenges facing commodity exporters such as South Africa.

That said, economic data released since February has been positive. Economic growth forecasts for South Africa in 2012 vary. South African Reserve Bank recently upped its own GDP growth forecasts for 2012 to 3 per cent.

In the past 12 months the ZAR/GBP rate peaked at 13.31 while hitting a low of 10.67. Our forecasts for the rate are as follows: 3 months 12.37; 6 months 12.24; and 12 months 12.68.

If you want to ensure your bottom line is protected, call us now and we’ll help you put together a risk strategy.  Alternatively, you  find out more about the rate forecasts in our monthly Outlook.