Rand Rally continues - 23rd Jul 2009

The Rand strenghtens further and has gained towards the Pound Sterling already 5% since its last weakest point a few weeks ago.

The reason for this development can be seen on the one side in the appointment of Gill Marcus as future Reserve Bank Governor, who will replace the current Governor Tito Mboweni on 9 November 2009. This decision reflects the recent all over tendency to appoint experienced and busy people to positions that need to deal with the country's finances in a crisis-compatible way.

On the other hand can be recorded that the risk appetite of various investors has increased due to a variety of economic indicators that show a more stable course through the rogh seas of the current glbal crisis.

The current account deficit of between 6% and 7% of the GDP seems not to be of any influence on the currency, which may also be due to the major transactions around MTN and Vodacom, which stabilise the Rand exchange rate in the moment. This deficit surely will have to be monitored as a continuing Rand strength will reduce Exports further and thus will push the deficit into areas more an more difficult to finance.

The possible further decrease in the prime lending rate at the end of this month might (sic!) slow the strengthening Rand a bit, depending on the caution the Monetary Committee of the Reserve Bank will excercise.