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Johannesburg - The rand is set to give up recent gains
against the dollar, with the persistent debt problems in the eurozone leaving
it vulnerable to another bout of weakness in the next few months, a Reuters
poll showed on Thursday.
The debt crisis in the eurozone, South Africa's largest
trading partner, has hurt demand for South Africa's goods and at times driven
investors away from riskier emerging market assets.
However, the currency has gained about 4% on the dollar so
far this year, hitting a near five-month high of R7.6433/$ this week in part on
signs of better growth from China and the United States.
But a Reuters poll showed those gains will not be sustained,
at least in the short term.
A poll of 32 analysts and strategists showed the rand could
end this month at R8.00/$ and soften further to R8.10/$ against the dollar in
three months' time.
"There is still a lot of global uncertainty with what
is going on in Europe, in particular the Greek private sector involvement and
the next tranche of funds which are likely to be released to Greek
authorities," said Jeffrey Schultz, macro strategist at Absa Capital.
The rand lost more than 20% against the dollar in 2011,
hitting two-and-a-half year lows of R8.61/$ in November, as the debt crisis in
the region deepened.
Athens is rushing to wrap up talks with lenders on its
second, €130bn bailout in a bid to unlock funds before big bond redemptions
fall due next month.
Bankers and officials have said the bailout must be
finalised before a debt swap deal with private bondholders can also be
announced.
The Greek crisis has also cast a dark cloud on South
Africa's economic outlook, with the Reuters Econometer showing that analysts
mostly have slashed their growth forecasts for this year and next.
Europe resolution will help
Once the dust has settled on the eurozone debt crisis and
there is more certainty about the global growth trajectory towards year-end the
rand should recover, the poll showed.
Analysts said it would end the next twelve months at R7.70/$
against the dollar as a resolution of the eurozone debt crisis could boost
appetite for risky assets.
"In the long run we still expect significant amount of
global emerging market bond inflows to occur which will benefit the South
African rand," said Peter Attard Montalto, emerging market economist at
Nomura International.
"Provided the Sarb is not be cutting rates - this
should also provide a little support to the currency, combined with the usual
things like lower trade linkages to Europe and eastern Europe," said
Montalto.
The Reserve Bank has left the repo rate at 5.5% since
November 2010, after reducing it by a cumulative 650 basis in the two years to
then.
At its last meeting in January, the bank hinted that a rate
cut was all but out of the window, but a firmer rand - with its implications
for a favourable inflation outlook - could be a temptation for further stimulus
to support the economy.
For now, consensus in the Reuters Econometer is the repo
rate to remain unchanged until the last quarter of the year, with a rise of 50
basis points to finish 2012 at 6%.
