The Rand has been in long term decline, unlike some of the
other emerging market currencies which have been considered attractive at
various times in the last few years. So any changes should be seen in this
light.
Certainly conditions for January were not good. The currency
was doing relatively OK till Jan 22 then suffered almost a 10% decline. It starts
to recover early February but there is no reason to expect any big improvement.
The long term effects remain in place throughout the rest of
the year, but the short term picture changes a little in May and June.
July and August though
see the conditions for decline back in place.
So more volatility, followed by lessening of some
restrictions and then some over-reaction
are likely.
September and October sadly seem to see a return to the more
severe conditions of the start of the year.
But there is evidence of a turning point in sentiment now
too.
Although all the structural conditions remain in place in
the last two months there is enough support ( interest rate rises perhaps) to
prevent any further changes in value now.
2015
By 2015, although the structural weaknesses remain, the
volatility seems to be reduced.
There is a sense of consolidation goes on as there is less
speculative trade and more support for the currency in January and February.
Events, perhaps externally, may also create volatile
conditions again briefly.
By May, the environment moves into a medium term shift.
There is some confusion about what is happening and some surprising policy
responses from the government which actually seem to favour the Rand at this
time. Although there is so much in the air that it is difficult to see where things are heading
long term now.
July is a quiet month with paucity of trade perhaps the only
issue.
August and September look generally positive for the
currency although once again there is a lot of background activity that might
be of concern.
October and November are more mixed as the conditions of the
previous months together with new policies and directions start to merge.
December is a relatively calm month as matters settle down a
bit more.
January and February 2016, are also mixed although now there
are less long term structural matters to contend with a more adjustment to new
policy.
March and April see some challenges and some surprises but
in the main there is little change in the value of the currency.
May is particularly good, with just enough energy to keep
things ticking along but without any direct challenges.
June and July suffer a little from the need to adjust
further to the new environment but on balance the conditions are positive for
the Rand.
August sees another change in the environment and a positive
trend throughout this month and September.
Even to extent that there is some over exuberance in late
September.
October and November are both positive with a key shift
occurring in sentiment.
December is a key month as everything comes together to
consolidate the position of the currency in a much better position.
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