The rand is undervalued and there is scope with the currency to boost to as much as 11 per dollar, said Colin Coleman, head of sub-Saharan Africa at Goldman Sachs.
The currency fell towards the weakest level in additional than couple of years this month after data showing the economy entered an economic depression inside second quarter, raising the country’s risk profile at any given time when emerging-market assets are under pressure at a rising dollar and global trade tensions. It’s regained some lost ground since President Cyril Ramaphosa unveiled a monetary plan a week ago in an attempt to revive growth.
The rand traded at 14.16 per dollar by 6:12 p.m. in Johannesburg on Friday. The currency has weakened about 17% since February, once it heats up rallied to a three-year high after Ramaphosa succeeded Jacob Zuma as president.
“Anything weaker than 13 rand to the dollar we see as undervalued therefore we see scope as many as 11 rand regarding equilibrium in the rand,” Coleman said in an interview Friday with Bloomberg Television. “There is important potential re-rating in a very positive sense for that rand to travel.”
Coleman said Ramaphosa’s package of proposals announced this morning, which the president billed for a stimulus program, may be a “stability and recovery plan” that shifts your ability to buy emphasis faraway from consumption to more fortunate spending.
The Goldman Sachs executive also said he’s optimistic Ramaphosa will secure victory to the ruling African National Congress in elections which can be scheduled to happen inside first 1 / 2 of next season. The fresh administration is on the “right track,” he was quoted saying.
“We are convinced the elections will allow obama to effectively purchase a renewed mandate from the population which effectively will underpin the modernisation programme and structural reforms he hopes to undertake,” Coleman said.
? 2018 Bloomberg L.P
