Taking a Look at Rand Volatility

The Rand is being affected by the narrative around interest rates, inflation and economic growth.

More specifically:

  • Currently, financial and currency markets are continually having to reassess their expectations around the outlook for inflation, interest rates and growth.   Higher than expected inflation is leading to further concerns about interest rates hikes.
  • In this environment,  the Rand is expected by some to fluctuate around a band of R14.50/$  to R15.50/$.   The currency is expected to move out of this range when the inflation, interest rate and economic growth indicators surprise to the upside or downside. 
  • This recalibration of financial markets is expected to persist for a number of months.  Once the outlook for global inflation is more assured and the impact of higher interest rates on global economic growth is better understood, the Rand is expected to be less volatile.

Source: Analytics Consulting FX Solutions