The South African rand is posing a challenge to the US dollar. Several experts, including Mike Keenan, a chief currency strategist at Absa CIB, believe that the rand could shake the greenback’s leadership by the end of the year.
At the turn of this year, the South African currency went into a historic tailspin having tumbled 16.5% against the US dollar. Remarkably, being a risky and commodity currency, the rand perked up in the first autumn month. The analyst has weighty arguments to predict that Africa’s most liquid currency will surge to 15.75 against the US dollar in late 2020 that is a notable advance from the current level of 16.5. Mike Keenan points out that the South African Reserve Bank is ready to tighten its monetary policy, so higher interest rates are sure to open the door for broad foreign investment to the country. Besides, the rand will find solid support from a flood of real estate buyers in South Africa. Another important factor is the US dollar’s weakness and a recovery of commodity prices that will reinforce the export-driven currency. Market participants have been poised to sell rand-denominated assets for the most part of the year. Now they are likely to revise the strategy.
A couple of months ago, experts recognized the Australian dollar, the New Zealand dollar, and the South Korean won to be the most appreciated currencies during the COVID-19 crisis. They gained favor with investors because of efficient stimulus measures implemented by the governments in these countries to mitigate the coronavirus economic shocks.
