Rand Forecasts Haven’t Been This Scattered Since at Least 2006

  • South Africa’s assets boosted by commodities, at risk from Fed
  • 2017 Rand predictions are most diverse in at least a decade

It’s anyone’s guess where South Africa’s rand is headed.

Donald Trump’s U.S. election victory has caught the world’s most volatile currency in a tug of war, with end-2017 forecasts ranging from a 9 percent gain to a 14 percent retreat against the dollar, estimates compiled by Bloomberg show. That’s the widest distribution since at least 2006, when Bloomberg started tracking the data.

Working against the rand are concerns a Trump presidency will force the Federal Reserve to quicken the pace of interest rate increases, eroding the extra returns from riskier emerging-market assets. At the same time, Trump’s plan to spend as much as $1 trillion on infrastructure has boosted commodities, which are South Africa’s main export earner, and prompted Goldman Sachs Group Inc. to recommend investors bet on higher prices next year.

The most bullish forecast for the rand, which envisages the currency at 13 per dollar at the end of next year, has a 60 percent probability, according to options data compiled by Bloomberg. The most bearish prediction from the more than 15 analysts polled is for a level of 16.50. The rand was trading 0.4 percent weaker at 14.1487 as of 1:58 p.m. in Johannesburg, its first decline in four days.

— With assistance by Stephen Kirkland

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