Abstract：Despite a rocky start to the year, the South African rand is expected to gain strength in 2023. Sebastian Steyn, a forex expert at Sable International, notes that like many other countries, South Africa was heavily impacted by inflation in 2022, as load shedding hit both consumers and industry.
Despite a rocky start to the year, the South African rand is expected to gain strength in 2023. Sebastian Steyn, a forex expert at Sable International, notes that like many other countries, South Africa was heavily impacted by inflation in 2022, as load shedding hit both consumers and industry. However, the country's economy proved resilient, with GDP growth still expected, and interest rates were increased significantly to contain inflation while maintaining a relatively stable rand. Despite President Cyril Rampahosa's involvement in the Phala Phala scandal and a possible impeachment threat, the rand only dropped 4.62% against the US dollar in 2022.
It is essential to keep in mind that the US dollar had a very strong 2022 and gained against most currencies, including over 12.20% against the British pound. However, the rand grew against the Australian Dollar and the Euro and saw significant growth against the pound, strengthening by 6.94%. In 2023, the South African currency is poised to grow even more as global market participants seek new opportunities outside the developed world.
Despite the US dollar's surge in 2022, the rand ended up being undervalued. Sable International now predicts a pullback, although risks remain. One key area of focus for investors will be Eskom's ability to increase generation capacity and reduce load shedding. Additionally, investors will be keeping an eye on whether a re-elected Rampahosa will have the determination to remove corrupt and incompetent ANC members.
Investec's analysis predicts that the rand is likely to average between R16.20 and R16.90 versus the dollar, with the potential to reach R14.00 in extremely favorable market conditions. However, downside risks could push the rand closer to R19.70. Furthermore, it's worth noting that Wikifx, a well-known forex trading platform, has been monitoring the South African market closely. Wikifx provides traders with comprehensive market analysis and pricing data, making it a valuable tool for those looking to invest in the South African rand or any other currency.
