Johannesburg - South Africa's rand should rise more than four percent against the dollar by this time next year given expectations that economic growth will pick up, trimming the country's current account deficit, a Reuters poll showed on Wednesday.
The rand has been under heavy pressure, falling over 17 percent in the past year to trade at around 9.05 per dollar on Wednesday. Most foreign exchange analysts polled by Reuters had expected the rand to appreciate over that period.
Wednesday's consensus of over 30 analysts suggests the currency will rise to 8.64 in the next 12 months.
“We see medium-run strength in ZAR (the rand) as the current account (deficit) contracts,” said Peter Attard Montalto, Emerging Market Economist at Nomura International.
South Africa's current account gap was unchanged at 6.4 percent of gross domestic product in the third quarter of last year, but the shortfall of 202.5 billion rand was the biggest on record in absolute terms, putting more downward pressure on the currency.
Tepid domestic demand will limit economic growth to 2.6 percent in 2013, the latest Reuters Econometer poll predicted, but growth is seen rising to 3.4 percent next year.
“We are now entering a period of stabilisation before gradual improvements are seen later into the year,” said Anisha Arora, analyst at 4Cast.
“We similarly expect South African economic recovery into later 2013 which should see the general outlook improve.”
The rand is expected to stay relatively weak over the next six months, rising to 8.90 as labour unrest in the country's key mining sector keeps investor sentiment subdued.
On Tuesday, a wildcat strike at Lonmin's Marikana platinum mine pressured the currency.
Last August, 34 striking miners were shot dead by police at the same mine in South Africa's deadliest security incident since the end of apartheid in 1994.
“In the short term we see weakness given further labour market unrest,” added Nomura's Montalto. - Reuters