MONEY

Rand facing a difficult Christmas

The discovery of the Omicron variant and the rapid implementation of travel bans has led to rand weakness in recent weeks – despite the fact that the Covid-19 variant has subsequently been found in many other places across the world, says Investec chief economist Annabel Bishop.

Bishop said that the travel bans are set to severely impact the country’s tourism, as well as South Africa’s exports and its foreign income.

She added that the bans and variant concerns could also have a negative impact on the local currency which typically sees strength over the end-of-year holiday period.

“The exchange rate, of the rand versus hard currencies, typically strengthens from November, right up to February of the following year, from foreign tourists rand purchases, while GDP experiences a lift from the hospitality, retail, tourism and other industries,” she said.

“It is likely that the domestic currency will struggle to make substantial gains into year-end, and today has only limped somewhat stronger, into the R15.90/dollar to R16.00/dollar
range, with the rand substantially weaker than it was mid-year at R13.40/dollar.”

Bishop said that the domestic currency would battle to return to a level of around R13.50/dollar again, and would likely remain trading in the R15/dollar to R16/dollar over the course of the remainder of this year and next year, but with a strong risk of tending even weaker.

At 15h00 on Thursday (9 December), the rand was trading at the following levels again the major currencies:

  • Dollar/Rand: R15.92 (+1.39%)
  • Pound/Rand: R21.01 (+1.24%)
  • Euro/Rand: R18.02 (+1.06%).

Read: SARS to introduce retirement fund tax changes in 2022

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