The rand has hit new lows for the 2024 year as it was trading at R19.11 to the dollar on Wednesday at 11:15pm.
On Tuesday, the rand was impacted by continued warfare in the Red Sea. At 5:00pm the rand was trading at R18.93 to the dollar.
Nigel Green, CEO of the deVere Group, said in a statement that the attacks in the Red Sea could trigger a second wave of inflation in 2024.
“Recent attacks on ships navigating this critical route have heightened fears of disruptions to the global supply chain. Such disruptions could lead to delays, increased shipping costs, and potential shortages of goods, impacting economies worldwide,” he advised.
INFLATION AND INTEREST RATES
The weakened rand has not been helped by other fiscal blows to South Africa’s struggling economy.
The South African Reserve Bank (SARB) Governor, Lesetja Kganyago, told media outlets on Tuesday that he ruled out cutting interest rates as inflation is still too prevalent in the country.
Kganyago was speaking to Bloomberg TV at the World Economic Forum in Davos, Switzerland, and noted that while real rates are not as high as before, they are not where he wants them to be.
“Our real rates are not particularly high, and inflation has come down—it's within target—but it is not quite where we would like to see it,” Kganyago said.
“And if we are to make any policy adjustments, we would have to see that inflation has declined to our anchor, which is 4.5 percent.”
Kganyago also noted that he expected inflation to average 5 percent in 2024 and 4.5 percent in 2025.
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