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The rand is on a run - here's where it could be heading towards the end of 2021 Global uncertainty has increased over the past
The rand is on a run - here's where it could be heading towards the end of 2021 Global uncertainty has increased over the past two months, unsettled by Covid-19 mutations and new lockdown restrictions, which is likely to impact the rand and other emerging market currencies, says Nedbank. The frequent restrictions on economic activity in many parts of the world continue to aggravate supply shortages and transport bottlenecks, keeping prices of raw materials and intermediate goods elevated, the bank said in a research note this week. "While temporary distortions, mainly pandemic-related disruptions, appear to cause global inflation, the US will start to normalise monetary policy over the next 12 months. This event will affect capital flows to the emerging market economies, but the impact could be less severe if commodity prices remain relatively firm and the global recovery continues.
Given these counterbalancing forces, we have revised our rand forecasts to reflect a more resilient picture over the near term. We still expect a mild depreciation during the rest of this year, followed by more significant weakness in 2022." The bank forecasts that the local unit will likely trade weaker towards the R14.83/dollar mark towards the end of 2021, increasing to the R15/dollar mark by mid-2022. Similar weakening is expected against the pound and euro, however not to the same extent as the greenback. The below table shows the fully monthly exchange rate forecasts for the coming months
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