S&P Global Ratings rand outlook

S&P Global Ratings Emerging Markets Economist, Elijah Oliveros-Rosen, weighed in on the outlook for the South African Rand in a recent interview with CNBC Africa. Oliveros-Rosen highlighted the strong performance of the Rand against the US dollar and expressed optimism for its continued resilience. He noted that the Rand is likely to maintain its current range of $17 to $18 per dollar for the rest of the year and into the next year. The economist pointed to a combination of external and domestic factors driving the Rand's strength. On the external front, he cited the supportive effects of the Federal Reserve's rate cuts and favorable commodity prices, with metals showing an increase despite oil prices remaining relatively stable. This balance benefits South Africa, a net importer of oil and exporter of metals. Domestically, Oliveros-Rosen underscored the improving growth trajectory, political optimism surrounding the national unity government, and the prudent fiscal measures being considered. Despite acknowledging the challenges and uncertainties of the government's composition, he remained cautiously optimistic about its ability to implement necessary reforms. The economist also addressed the impact of interest rate cuts by the South African Reserve Bank on the Rand's strength, emphasizing the importance of inflation control in the policy decisions. Looking ahead, he anticipated further rate cuts in the coming months and underscored the potential risks posed by higher oil prices due to geopolitical tensions in the Middle East. Additionally, Oliveros-Rosen highlighted the need for structural reforms in the logistics sector to unlock the South African economy's growth potential. He emphasized that addressing supply side constraints, particularly in energy and logistics, would be essential for sustained economic growth. The economist's forecast for South Africa's economic growth stood at 1.5% for the next year, reflecting the current challenges and limitations facing the economy. Overall, Elijah Oliveros-Rosen's assessment painted a picture of cautious optimism for the South African Rand, grounded in strong fundamentals and positive prospects amid evolving global and domestic dynamics.