Automotive Business Review September | страница 26

w hat ’ s the B u z z ? How will the Rand shape? Cees Bruggemans, consulting economist at Bruggemans & Associates, says that it is all quiet on the currency front, but that we are but in a temporary lull, along with other emerging market peers. Another period of currency adjustment is to be expected sometime, such being apparently the way the world progresses through major changes. So more Rand weakness likely ahead. We are singled out as being more undervalued than some of our peers, with the Rand reflecting our fragile balance of payments deficit, ou r struggling export competitiveness, our fractious labour relations, our somewhat over-stretched government finances, our slow growth, our sticky budget deficit and still climbing national debt ratios, and skittish rating agencies. So we are effectively on a ledge, on the brink of being pushed over the edge anew by events, and potentially seeking even lower Rand levels. As things stand, the Rand fully reflects our current standing in the world, as much externally as domestically. What it possibly doesn’t yet fully reflect is the probable impact of further global adjustments to come later in the decade. The very size of the coming shifts is intimidating, which opens up a rich array of possibilities extremely difficult to read ahead of time. On the one extreme, the global adjustment may acquire new shock aspects as US growth diverges from the expected trajectory. On the other extreme, it may all proceed very benignly, with US growth modest, resource uptake slow, inflation benign, and central banks ever so gingerly feeling their way, with markets buying all this tenderness. In between these extremes there remain many different shades, all potentially reflected in the Rand, depending on outcome. Bruggemans personal preference remains for a digestible trajectory, with markets adjusting to rates adjustments, but recognising the ongoing global growth and subdued inflation, not losing confidence, but indeed having it bolstered. Yet the journey through 2015-2018 need not be a repeat of 2013 even if the risk is ever present. But only time can tell! The more benign interpretation gives Rand weakening at inflation differentials. That means weakening the Rand at 3% annually. Shock treatment (market tantrums) would obvious weaker the Rand much faster and further, as much as 100 cents annually through 2020. Really severe shock treatment could be even more Rand devastating, with annual band weakening at times of as much as 200-300 cents. We are already undervalued in real terms, reflecting just the way markets read us and events. Only exceptional new shock events may shock us much more heavily in real terms. For now that remains speculation, not a given.