FX analysts are used to fluctuations in South Africa’s currency. It tends to suffer disproportionately when emerging market (EM) risk sentiment is low, but rise faster than others when there is optimism in the air.
Having been hammered by the coronavirus outbreak, the rand is now at pre-pandemic levels. And Nedbank chief economist Nicky Weimar says it is rapidly approaching fair value, based on purchasing power parity.
“If one considers that South Africa’s economy is far more inefficient than those of its major trading partners, the rand’s undervaluation is probably close to 3%,” she says.
Access intelligence that drives action
To unlock this research, enter your email to log in or enquire about access
