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Johannesburg - The rand is seen weaker against the dollar 12 months from now as yield spreads with developed markets narrow, causing investors to quit riskier emerging markets, a Reuters poll showed on Wednesday.
Median forecasts were for the currency to end-February at R7.05/$ per dollar, then to stay flat at R7.06/$ by end-April. The rand, currently at R7.14/$, will weaken to R7.23/$ six months from now, and R7.30/$ in 12 months.
While median forecasts show only slight depreciation, the range of forecasts for the 12-month horizon was wide, from a strengthening to R6/$ to a weakening to R8.5/$.
The rand has rallied more than 20% since the beginning of 2009, buoyed by foreign capital inflows as investors go after higher yields in emerging markets.
However, this year the currency has been on a weakening trend, losing more than 7% since the beginning of January amid concerns that Europe's debt crisis will intensify and spread, reducing risk appetite.
"Sovereign debt contagion is the single biggest risk for 2011," said Kgotso Radira, an economist at investment bank Investec.
"The fallout would likely be larger than before, meaning the rand could weaken substantially on the sudden outflow of foreign investments due to heightened levels of risk aversion."
The Reserve Bank left its key policy rate unchanged last month, but signalled the end of a 650 basis-point easing cycle that began in 2008.
Most analysts expect an increase in the repo rate, currently at a historic low of 5.50%, by the end of the year as the central bank seeks to keep a lid on inflation.
