Rand review & 2024 outlook
One this day, a year go, the rand traded at R17.32 to the US dollar. In January, the local unit touched a best level of R16.92 to the greenback on January 23 and worst level of R19.51 on around Oct 5. To discuss 2024 trends for the rand. Joining CNBC Africa for today's forex focus is Rayno Nigrini, Foreign Exchange Structurer at RMB.
Wed, 20 Dec 2023 06:22:12 GMT
Disclaimer: The following content is generated automatically by a GPT AI and may not be accurate. To verify the details, please watch the video
AI Generated Summary
- The historical trends of the rand indicate a pattern of strengthening in December followed by a reversal in January, influenced by market dynamics such as futures closeouts and option expiries.
- 2024 is expected to see the rand continuing its downward trend, potentially starting the year at around 18 against the US dollar, with the possibility of further weakening if interest rate cuts by the South African Reserve Bank diminish the currency's carry trade appeal.
- Geopolitical events and elections in 2024, including those in the US and South Africa, add complexity to forecasting the rand's performance, with the pace of interest rate cuts by central banks playing a crucial role in determining the currency's direction throughout the year.
The South African rand has had a tumultuous year, with fluctuations against the US dollar keeping investors on their toes. To discuss the 2024 trends for the local currency, Rayno Nigrini, Foreign Exchange Structurer at RMB, joined CNBC Africa for a forex focus. Nigrini highlighted the historical trends of the rand, mentioning that December tends to be a time when the rand strengthens, only to see a reversal come January. He pointed out that market movements in December may have been influenced by futures closeouts and profit-taking on positions. Option expiries at specific levels also played a role in guiding the rand's movement. Looking ahead to 2024, Nigrini believes the rand could continue its downward trend, potentially starting the year at around 18 against the US dollar. However, he cautioned that signals from the South African Reserve Bank regarding interest rates could affect the currency's strength. Nigrini suggested that if the rand loses its carry trade appeal due to interest rate cuts, it may weaken against the dollar, similar to the current trends seen with the Fed's policy. Addressing the impact of geopolitical events and elections in 2024, Nigrini mentioned that while these factors are significant, the pace of interest rate cuts by the South African Reserve Bank compared to the Federal Reserve's actions will also play a crucial role in determining the rand's direction. He offered price targets for the rand at various points in 2024, projecting a gradual weakening over the year, with an estimated value of 18.50 by the end of the year. Despite the uncertainty surrounding unforeseen events like 'Lady R', Nigrini expressed cautious optimism for a stable 2024 for the rand. Thus, investors and travelers alike should remain vigilant and adaptable to potential market shifts in the coming year.
Get this delivered to your inbox, and more info about about our products and services. By signing up for newsletters, you are agreeing to our Terms of Use and Privacy Policy.
