The SA Daily
14 January 2019
EM currencies recoup losses
Shireen Darmalingam
- Emerging market (EM) currencies have, since the beginning of this year, largely gained ground to the dollar, with the Brazilian real, Russian ruble and rand amongst the biggest gainers so far, recouping some 2018 losses.
- The rand has thus far gained 3.7% in January, compared to a total loss of 17.4% in 2018. It is now at R13.90$, last seen in early December last year.
- EM currencies will continue taking their cue from the global trading environment. US and UK politics dominate newsflow and sentiment, while the US-China trade war remains at the forefront too. Markets await developments on the trade war, Brexit, and the US government shutdown now in its fourth week. EM currencies are therefore likely to remain in the slipstream of swings in sentiment.
- We expect the rand to remain relatively weak in the short term, per our valuations models, due to the uncertainty ahead of the SA national elections as well as renewed concerns of load-shedding. Global headwinds too continue to pose a risk.
- Nonetheless, we pencil in a rebound in the latter part of the year. We expect the rand to end the year at R13.40/$.
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