The Professional Edition 5 April 2022 | Page 12

The rand over the past 18 months ( average per month )

( Sources : Oanda , SARB )

17.5

R /$

17

16.5

16

15.5

15

14.5

14

13.5

The extent of volatility induced by the COVID-19 pandemic is unprecedented , with all emerging markets suffering the same fate of unpredictable ups and downs , mostly caused by recurring changes to lockdown regulations , supply-side disruptions and , more recently , higher bond yields in the US .

Rand resilience

Compared to most other currencies , the South African rand has actually fared exceptionally well , with its value on 24 January 2022 only down by 7 % compared to early January 2020 ( prior to COVID ). Since the March 2020 meltdown of emerging market currencies , the rand has flexed its muscles like never before , gaining 26 % against the US dollar .

Reasons for the resilience of the rand over the past two years are not difficult to find . For starters , the sell-off during the initial lockdown period was always going to be a temporary phenomenon . Interestingly , rand weakness played nicely into the hands of primary sector exporters , especially minerals .

Secondly , an extended upward phase of the commodity price cycle and a fast recovery of the Chinese economy boosted exports to record levels in 2020 , followed by further momentum and more records in 2021 .

During the first 11 months of 2021 , exports amounted to more than R1.5 trillion , an increase of 33 % over the figure for 2020 . As a result , the cumulative trade surplus between January and November 2021 more than doubled to a level of R316 billion .

The country ’ s export performance during 2021 has played a major part in the on-going process of economic recovery and has also provided a solid foundation for sustained recovery and growth in 2022 .

Manufacturing PMI on track

Looking ahead at prospects for sustained growth in manufacturing , the Absa Purchasing Managers ’ Index ( PMI ), compiled by the Bureau for Economic Research at Stellenbosch University , suggests a continuation of robust sales trends for this key sector .

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